SEC Proposes ETF Rule, Amends Liquidity Risk Reporting Rule and Requires Inline XBRL Reporting by Funds

Sullivan & Cromwell LLP - July 11, 2018

At an open meeting held on June 28, 2018, the Securities and Exchange Commission (“SEC”) voted, among other actions, to: (i) propose a rule and related form amendments under the Investment Company Act of 1940 that would permit exchange-traded funds that satisfy certain conditions to operate without first obtaining an exemptive order from the SEC; (ii) adopt amendments to Form N-PORT and Form N-1A related to liquidity risk management by open-end management investment companies (other than money market funds and small business investment companies); and (iii) adopt amendments to rules and forms to require the use of the Inline eXtensible Business Reporting Language (XBRL) format for submission of fund risk and return summary information. 

The memorandum summarizes key aspects of the SEC’s package of approved and proposed rules; the SEC is seeking comment from the public on various aspects. The discussion of Inline XBRL is limited to the principal aspects relevant to registered investment companies. For a discussion of the new Inline XBRL requirements for operating companies, please see our memorandum dated July 5, 2018, “SEC Adopts New Rules Affecting Public Company Reporting.”