More Stress Testing of MMFs

SEC may increase oversight of asset-manager risks, amid a growing focus on risk monitoring and data analytics.

The U.S. Securities and Exchange Commission (SEC) is considering an increase in its oversight of the risk posed by large asset managers such as BlackRock Inc.

The agency’s staff is drafting a plan to expand its stress testing of money-market funds (MMFs) and require more robust reporting of data, SEC Chairman Mary Jo White said in a speech today in Washington. The effort draws on the work of former portfolio managers and investment analysts who now work at the SEC, White told a conference sponsored by the Practicing Law Institute.

A study issued last year by Treasury’s Office of Financial Research said money managers could endanger the financial system when reaching for higher returns, herding into popular asset classes, or amplifying price movements with leverage. White told the Senate Banking Committee this month that the SEC “agreed to disagree” with Treasury economists on some of the study’s findings.

“The SEC of 2014 is an agency that increasingly relies on technology and specialized expertise,” White said today. “This is particularly evident in the SEC’s new risk monitoring and data analytics activities. One important example is the SEC’s new focus on risk monitoring of asset managers and funds."

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