This post continues our assessment of whether the Limited Derivatives User requirements of Rule 18f-4(c)(4) effectively and efficiently accomplish the SEC’s aim of providing “an objective standard to identify funds that use derivatives in a limited manner.” Here
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Derivatives & Repo Report
A Buy-Side Guide to Regulatory and Transactional Issues Related To Derivatives and Repurchase Agreements
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RIAs and Bitcoin Futures ETFs: Forget Not Thy CPO and CTA Analysis
The financial press is awash this morning with reports that the launch of a bitcoin futures exchange-traded fund (a “BTC Futures ETF”) may be imminent.
Before recommending that clients invest directly in bitcoin or in a BTC Futures ETF, a…
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Assessing the Limited Derivatives User Requirements of Rule 18f-4—Costs
Our last series of posts on Rule 18f-4 have struggled to understand how its Limited Derivatives User requirements are supposed to work. We have done the best we could to explain the process for calculating a fund’s derivatives exposure,…
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Compliance Checklist for Limited Derivatives Users
As has been our practice in this series on new Rule 18f-4, we end our survey of its Limited Derivatives User requirements with a compliance checklist. This checklist reiterates much of our earlier post on Derivatives Exposure: Why …
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Hedging Derivatives under Rule 18f-4: Not an “All or None” Exclusion
This post will address another ambiguity in the “10% buffer” Rule 18f-4 provides for excluding the notional amount of derivative transactions that hedge currency or interest rate risks (“Hedging Derivatives”) when calculating the Derivatives Exposure of a Limited …
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Rule 18f-4: One 10% Buffer or Many?
This post continues our examination of the “10% buffer” for Hedging Derivatives, which refers to the amount by which the notional amounts of Hedging Derivatives can exceed the value, par or principal amount of the hedged equity and fixed-income…
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Rule 18f-4: The 10% Buffer and Changes in Hedged Investments
By Stephen A. Keen and Andrew P. Cross
This post continues our examination of the “10% buffer” for Hedging Derivatives, which refers to the amount by which the notional amounts of Hedging Derivatives can exceed the value of hedged…
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Rule 18f-4: The 10% Buffer and Adjusting Notional Amounts of Hedges
We promised a few posts back to discuss how a Limited Derivatives User should apply what we termed the “10% buffer” to determine whether currency and interest-rate derivatives may be excluded from its derivatives exposure. This post begins to tackle…
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Limited Derivatives Users—Applying the Interest Rate Hedging Exclusion
By Stephen A. Keen and Andrew P. Cross
Our last post examined examples of currency hedges that we believe Rule 18f‑4(c)(4)(i)(B) should allow a fund seeking to comply with the Limited Derivatives User requirements to exclude from its derivatives exposure. This…
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Dealing with the New Derivatives Rule: A Guide for Legal and Compliance Professionals (IAA Newsletter September 2021)
Today, the Investment Adviser Association published the attached article (Link to Article Dealing with the New Derivatives Rule) in its September 2021 IAA Newsletter.
At a high level, the article:
- Provides a background on the limitations on senior securities