In our extensive examination of the requirements for Limited Derivatives Users under Rule 18f‑4(c)(4) we have tried to be conscientious in pointing out matters open to interpretation. While we have not been shy about arguing for interpretations that would reduce a fund’s derivatives exposure and thus ease compliance with these requirements, we acknowledge that these are just our informed opinions. Absent guidance from the SEC staff, chief compliance officers and counsel to fund directors and trustees will need to consider these matters and reach their own conclusions.

This post wraps up our examination of the Limited Derivatives User requirements with a list of these interpretive questions. While we are sure it is incomplete, at least it provides a starting point for consideration.

Are the following derivatives transactions?

Can a fund use different methods to calculate the gross notional amount of derivatives transactions?

In determining what derivatives transactions to exclude from a fund’s derivatives exposure:

When applying the “10% buffer” for excluding currency and interest-rate derivatives, should a fund:

That’s all for Limited Derivatives Users. Next, we consider fund-of-funds under Rule 18f-4.