Yesterday, the Investment Adviser Association published our article on “Dealing with the New Derivatives Rule: A Guide of Legal and Compliance Professionals” in the “Compliance Corner” of its September 2021 IAA Newsletter.

At a high level, the article:

  • Provides a background on the limitations on senior securities under the Investment Company Act of 1940 (the “1940 Act“);
  • Affords readers with an overview of Rule 18f-4 under the 1940 Act;
  • Summarizes how a fund qualifies as a limited derivatives fund (including a six-step process for calculating derivatives exposure); and
  • Describes the key elements of a derivatives risk management program that is required to be implemented by a fund that does not qualify as a limited derivatives fund (i.e., a VaR Fund).

Regular readers of this blog have already read about all of this in more detail. But the article provides a handy summary, including many of the tables found in our posts.

We are grateful for the opportunity to have contributed the article to the IAA Newsletter.