The SEC voted to propose a rule designed to enhance the regulation of the use of derivatives by registered investment companies, including closed-end funds, as well as mutual funds, ETFs and business development companies. The proposed rule would provide an updated and more comprehensive approach to the regulation of funds' derivatives use. The proposed rule would permit these funds to use derivatives that create such obligations, provided that they comply with certain conditions designed to protect investors. These conditions include adopting a derivatives risk management program and complying with a limit on the amount of leverage-related risk that the fund may obtain. Related: U.S. securities regulator proposes new rules on use of derivatives in ETFs - Reuters
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