The SEC's Derivatives Proposal
A solution in search of a problem?
In December, the SEC released a document that addressed the derivatives usage of mutual funds (and exchange-traded funds). The commission has been busy over the past year, having submitted two proposals earlier in 2015, one on portfolio reporting and the other on investment liquidity. I thoroughly saluted the former and was of a mixed mind on the latter.
On the merits of this newest proposal, I will not yet write definitively. For one thing, Morningstar's Policy Committee has yet to issue its official response. By default, this article might appear to represent Morningstar’s views--and, per the disclaimer that follows this column--that is not necessarily so. For another, the proposal is long and its subject matter complex. Thus, I tread carefully.