Today the SEC considered and voted on three rules relating to investment management. They voted 4 to 1 to approve a final rule requiring the use of Inline XBRL for both mutual funds and operating companies. If they want to, funds can begin filing in Inline XBRL before their requirement goes into place once the EDGAR system has been modified, which the Commission expects by March 2019. The SEC also noted that XBRL will continue to be part of disclosure controls and procedures and that there is no change in assurance requirements (XBRL is not subject to an audit requirement). See additional information below:
FINAL RULE: Inline XBRL
Inline XBRL for Funds
--Funds that are currently required to submit risk/return summary information in XBRL will be required, on a phased basis, to transition to Inline XBRL.
--The amendments also eliminate the 15 business day filing period for risk/return summary XBRL data, so that the data will be more timely available to the public.
--Large fund groups (net assets of $1 billion or more as of the end of their most recent fiscal year) will be required to comply two years after the effective date of the amendments.
--All other funds will be required to comply three years after the effective date of the amendments.
Inline XBRL for Operating Companies
--Operating companies that are currently required to submit financial statement information in XBRL will be required, on a phased basis, to transition to Inline XBRL.
--Large accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2019.
--Accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2020.
--All other filers will be required to comply beginning with fiscal periods ending on or after June 15, 2021.
--Filers will be required to comply beginning with their first Form 10-Q filed for a fiscal period ending on or after the applicable compliance date.
Website Posting Requirement Elimination
--The requirement for operating companies and funds to post XBRL data on their websites will be eliminated upon the effective date of the amendments.
PROPOSED RULE: Codifying ETF Registration Without Needed Exemptive Relief
The SEC voted to propose a rule that would allow most Exchange Traded Funds (ETFs) to register like normal funds without going through a lengthy Exemptive Relief (40-APP) process.
ETFs, which started in 1992, have grown to have over $3 trillion in assets under management (AUM) and there are ~1900 ETFs. All ETF sponsors to date have had to go through a 40-APP process. Also, the exemptions granted have changed over time resulting in an uneven playing field in the ETF space.
--If this rule becomes final, all ETFs that follow the rule can skip the 40-APP process EXCEPT:
--ETFs that are UITs
--Leveraged and/or inverse ETFs
--ETFs that are share classes of regular mutual funds
FINAL RULE: Liquidity Management
The SEC approved a final rule relating to liquidity management disclosure requirements.
Toppan Vintage is here to answer questions and guide our clients through successful completion of these new requirements. Changing regulations are reflective of the constantly updating and fluctuating regulatory rules imposed by governing bodies all over the world. To keep up with changes in regulation requirements companies are encouraged to reach out to their service providers whose SEC experts are indispensable.
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