On August 10, 2022, the SEC voted to propose amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds. The amendments, which the Commodity Futures Trading Commission is concurrently considering to propose jointly with the SEC, are designed to enhance the Financial Stability Oversight Council’s ability to assess systemic risk as well as to bolster the SEC’s regulatory oversight of private fund advisers and its investor protection efforts in light of the growth of the private fund industry.

Form PF, adopted by these regulatory agencies a decade ago, provides the Commission and the Financial Stability Oversight Counsel with information about the basic operations and strategies of private funds. Private funds are pooled investment vehicles that are excluded from the ‘40 Act definition of investment company. Such funds include hedge funds, private equity funds, and liquidity funds.

The proposed amendments would:

• Enhance how large hedge fund advisers report information such as investment exposures, borrowing and counterparty exposure, market factor effects, currency exposure reporting, turnover, country and industry exposure, central clearing counterparty reporting, risk metrics, investment performance by strategy, portfolio correlation, portfolio liquidity, and financing liquidity to provide better insight into the operations and strategies of these funds and their advisers and improve data quality and comparability.

• Require advisers to report additional data about their operations and their private funds, such as assets under management, withdrawal and redemption rights, gross asset value and net asset value, inflows and outflows, base currency, borrowings and types of creditors, fair value hierarchy, beneficial ownership, and fund performance.

• Eliminate duplicative questions and require more data about hedge fund investment strategies, counterparty exposures, and trading and clearing mechanisms.

• Require advisers to report separately each component fund in complex fund structures, such as master-feeder arrangements and parallel fund structures.

• Remove the aggregate reporting requirement for large hedge fund advisers.

The proposed amendments will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days after the date of issuance and publication on SEC.gov or 30 days after publication in the Federal Register, whichever period is longer.