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2020 Annual Report to Members: A Conversation with IDC Managing Director Thomas Kim

By Thomas Kim

January 21, 2021

VIEW AS PDF

As Thomas Kim finished his first year as IDC's managing director, he sat down to discuss the organization’s priorities. Below is an abridged version of his conversation. To read the full Q&A, please see ICI’s 2020 Annual Report to Members.

Thomas Kim

How did IDC adapt to the challenges posed by the COVID-19 crisis?

Early in the crisis, IDC engaged in regular conversations with SEC staff to seek a broadening of relief from in-person board meeting requirements. We understand that they are considering ways in which relief could be made permanent. With the technology available today, it is important that rules be modernized to allow fund boards to interact in effective and flexible ways, and we look forward to ongoing conversations with the SEC on this issue.

IDC also kept the director community informed about current conditions during a period of market volatility, and we adapted our programs to a virtual environment. Members of the Governing Council and other fund directors provided real-time insights on the needs of the independent director community. Through frequent check-in calls with them and collaboration with ICI colleagues, IDC mobilized to deliver the strongest programming possible to independent directors during this time.

What are the top policy developments that IDC worked on this year?

One of the most important developments has been fair valuation. We commended the SEC for developing its proposed rule. While the modernized framework contained many positive elements, IDC also commented on some prescriptive elements in the rule with recommendations for modifications.

The SEC adopted the fair valuation rule in December and recognized the complementary roles that fund boards and advisers play in the fair valuation process and the discretion they exercise. The final rule also was responsive to a number of IDC recommendations that addressed the prescriptive nature of the proposed rule.

Another important development IDC worked on this year was the SEC’s re-proposed rule on the use of derivatives in investment management. IDC submitted a supportive comment letter but recommended some modifications about how fund boards should oversee derivatives risk managers. The SEC’s final rule released in October reflected a far better approach than the SEC’s 2015 proposal and improved upon the re-proposal issued in November 2019. The final rule provided greater flexibility for fund boards to determine the frequency and content of board reports and clarified the fund board’s role in approving the designation of a derivatives risk manager.

Finally, and very relevant to the independent director community, was the temporary relief the SEC granted relating to in-person meeting requirements for fund boards.

How is IDC carrying out its mission to educate and offer peer-to-peer engagement for the independent director community during the COVID-19 crisis?

To make sure that fund boards wouldn’t miss a beat during the coronavirus crisis, we pivoted quickly to deliver our educational offerings on a virtual basis. That started with expanding our webinars and conference calls, both in frequency and content, to ensure we were informing and helping fund boards during a period of market volatility. In addition, we launched virtual roundtables in lieu of in-person chapter meetings. Similarly, we are offering our Foundations for Fund Directors educational program virtually.

We also hosted IDC’s first virtual fund directors conference to take the place of the meeting that usually occurs in Chicago. We saw record attendance and are very pleased with the response from independent directors. While we look forward to returning to in-person conferences and meetings, we’re ready to deliver top-notch programming virtually as long as that’s necessary.

Thomas Kim is managing director of the Independent Directors Council.

Permalink: https://www.ici.org/viewpoints/21_view_aridc

TOPICS: Fund GovernanceIDC

A New Benchmark for Distribution Oversight

By Ahmed Elghazaly

July 21, 2020

On June 1, the fund industry achieved a milestone for global cooperation. In an industry-led agreement, fund distributors and fund managers of Undertakings for the Collective Investment in Transferable Securities (UCITS) and alternative investment funds (AIFs) joined together to issue a common protocol for distribution oversight.

Read more…

TOPICS: EuropeFund GovernanceFund RegulationGlobalICI GlobalInternationalOperations and TechnologyShareholder

A New Chapter of Growth and Impact: IDC’s 2019 Annual Review

By Thomas Kim

February 18, 2020

In a letter in the Independent Directors Council's 2019 Annual Review, IDC Managing Director Thomas Kim discusses the beginning of his role as head of IDC....

Read more…

TOPICS: Fund GovernanceFund RegulationIDC

Proxy Proposals Worth Supporting

By Matt Thornton

January 29, 2020

The SEC can save millions of dollars for registered fund shareholders, while maintaining investor protections, by reforming the fund proxy system. The system, which funds use to solicit votes from their shareholders, poses significant challenges and costs to funds and their investors. A new report by the Investment Company Institute points to concrete regulatory actions that would improve the efficiency and cost-effectiveness of the fund proxy system…

Read more…

TOPICS: Fund GovernanceMutual FundProxy VotingShareholder

Celebrating 15 Years: Join IDC for a Special Fund Directors Conference in October

By Amy B. R. Lancellotta

September 24, 2019

IDC’s Fund Directors Conference is always an important event for the fund director community, but this year’s gathering will take on special meaning. On October 21–23 in Chicago, we’ll mark 15 years of supporting fund directors’ work on behalf of fund shareholders—by taking stock of how fund governance has evolved, surveying today’s industry and regulatory landscape, and contemplating the road ahead.

Read more…

TOPICS: Fund GovernanceIDC

A Year of Advocacy: IDC’s 2018 Annual Review

Amy B. R. Lancellotta

January 31, 2019

IDC is well known for its education and outreach programs—and it’s not hard to see why. Year after year, they provide fund directors with opportunities to hone their craft and connect with one another, equipping them with the tools they need to thrive in their oversight role for the benefit of fund shareholders....

Read more…

TOPICS: Fund GovernanceFund RegulationIDC

SEC Should Reject Complex, Costly “Pass-Through” Proxy Voting

By Paul Schott Stevens

October 2, 2018

Policymakers and regulators at the US Securities and Exchange Commission (SEC) have renewed their interest in proxy voting issues recently. Among the items under discussion at an upcoming SEC Roundtable is the idea that a fund would only be allowed to vote on portfolio company proxies after the fund asks its own shareholders how the fund should vote. In essence, this would “pass through” to fund shareholders the decision of how corporate proxies would be exercised. Even the briefest consideration demonstrates how misguided and impractical the idea is—and why it should go no further.

Read more…

TOPICS: Fund GovernanceFund RegulationProxy VotingShareholder

Fund Adviser Proxy Votes Align with Fund Interests

By Paul Schott Stevens

September 24, 2018

A key assertion in “Cracking the Proxy Racket” (The Wall Street Journal's Review & Outlook, September 18) is that asset managers vote “in block” to support recommendations set forth by advisory firms like Glass Lewis and Institutional Shareholder Services. Such statements ought to be tested against actual data.

A decade’s worth of research shows that fund advisers vote proxies diligently, in line with their fiduciary duty to the fund and its shareholders...

Read more…

TOPICS: Fund GovernanceFund RegulationIndex FundMutual FundProxy VotingShareholder

Education, Outreach, Advocacy: A Big 2017 for IDC and Fund Independent Directors

By Amy B. R. Lancellotta

February 8, 2018

The following appeared as the “Letter from the Managing Director” in IDC’s 2017 Annual Review.

If there has been a single constant across the 13-year history of the Independent Directors Council (IDC), it’s the stability of our four-part mission...

Read more…

TOPICS: Fund GovernanceFund RegulationIDCMutual Fund

Independent Directors’ Stringent Oversight Contributes to Decline in Fund Fees

By Amy B. R. Lancellotta

January 9, 2018

The following ICI Viewpoints is a letter to the New York Times by Amy B. R. Lancellotta, managing director of the Independent Directors Council, in response to an article published on December 30, 2017.

Read more…

TOPICS: Fund GovernanceFund RegulationMutual FundShareholder

A Way Forward on Modernizing Fund Director Responsibilities

By Amy B. R. Lancellotta

November 14, 2017

In recent years, the workload for boards of US regulated funds has grown heavier and more complex—owing in part to the fund industry’s growth and evolution, but due largely to a raft of new responsibilities established in Securities and Exchange Commission (SEC) rulemakings and other initiatives.

Read more…

TOPICS: Fund GovernanceFund RegulationMutual Fund

Funds Actively Seek Companies’ Sound Management

By Paul Schott Stevens

July 3, 2017

The following ICI Viewpoints is a letter to the Wall Street Journal by Paul Schott Stevens, president and CEO of the Investment Company Institute, in response to an editorial published on June 22, 2017.

In their muddled and inconsistent arguments, the authors of “Index Funds Are Great for Investors, Risky for Corporate Governance” (op-ed, June 22) rely on unfounded assertions while ignoring clear legal requirements placed on registered funds, their boards, and their advisers...

Read more…

TOPICS: Exchange-Traded FundsFund GovernanceFund RegulationIndex FundMutual FundShareholder

Education, Outreach, Advocacy: A Big 2016 for IDC and Fund Independent Directors

By Amy B. R. Lancellotta

January 17, 2017

The Independent Directors Council (IDC) just wrapped up another year of vigorous support for the fund director community—educating directors, bringing them together to share ideas and experiences, and advocating on their behalf in policy debates. This brief post, adapted from IDC’s 2016 Annual Review, highlights some of IDC’s more notable work over the course of the year.

Read more…

TOPICS: Fund GovernanceFund RegulationMutual Fund

It’s Time: SEC Proposals Show the Need to Reexamine the Role of Fund Boards

By Amy B. R. Lancellotta

July 7, 2016

The proper role for fund independent directors—the role where they are best-positioned to represent shareholder interests—is to oversee the work of fund management. The sharp distinction between directors’ oversight role and management’s on-the-ground, day-to-day responsibilities has been a major factor in the modern fund industry’s 75-plus years of success.

Read more…

TOPICS: Fund GovernanceFund RegulationMutual Fund

Liquidity Risk Management Must Be Done Right

By Paul Schott Stevens

January 15, 2016

The following ICI Viewpoints is a lightly edited version of a letter that ICI President and CEO Paul Schott Stevens sent to U.S. Securities and Exchange Commission (SEC) Chair Mary Jo White, as part of the Institute’s overall response to the SEC’s liquidity risk management proposal. 

Read more…

TOPICS: Financial StabilityFund GovernanceFund RegulationInternationalMutual FundOperations and TechnologyShareholderTrading

How the SEC’s Six-Bucket Approach Could Provide a False Picture of Liquidity

By Brian Reid

January 14, 2016

As I explained in a previous post, I filed a letter on January 13 with the U.S. Securities and Exchange Commission (SEC) in response to its liquidity risk management proposal and to Liquidity and Flows of U.S. Mutual Funds, a study by the Commission’s Division of Economic and Risk Analysis (DERA). My letter was one of four components of ICI’s multipart response to the SEC proposal.

Read more…

TOPICS: Financial StabilityFund GovernanceFund RegulationInternationalMutual FundOperations and TechnologyShareholderTrading

The SEC’s Liquidity Proposal: Good Goals, Unintended Consequences

By Brian Reid

January 13, 2016

On January 13, I filed a letter with the U.S. Securities and Exchange Commission (SEC), in response to the SEC’s liquidity risk management proposal and to Liquidity and Flows of U.S. Mutual Funds, a study by the SEC’s Division of Economic and Risk Analysis (DERA). My letter was one of four components of ICI’s multipart response to the SEC proposal.

Read more…

TOPICS: Financial StabilityFund GovernanceFund RegulationInternationalMutual FundOperations and TechnologyShareholderTrading

Mutual Fund Investments in Private Placements: an Overview

By Gregory M. Smith

November 23, 2015

Given recent media interest in mutual fund investments in private placements, it might be helpful to review mutual fund disclosure and valuation obligations. How do funds handle securities that are not publicly traded?

Read more…

TOPICS: Bond FundEquity InvestingFund GovernanceFund RegulationInvestment EducationMutual FundOperations and TechnologyTrading

Changes to Money Market Funds Are Showing Up in Data

By Sean Collins

November 10, 2015

In July 2014, the Securities and Exchange Commission (SEC) adopted new regulations for money market funds.

Read more…

TOPICS: Fund GovernanceFund RegulationMoney Market Funds

The Wall Street Journal’s Dangerous Disservice to Investors

By Mike McNamee

September 22, 2015

For 75 years, mutual funds have successfully met their regulatory obligation to fulfill redemption requests within seven days, meeting investor demands and delivering on their investment objectives through good markets and bad.

Yet the Wall Street Journal seems determined to ignore this established history and the circumstances surrounding it. It has created a liquidity “measure” of its own devising—a test that no regulator has endorsed and no informed market participant would credit. The newspaper uses its self-invented process to imply that bond mutual funds are “pushing the limits” of Securities and Exchange Commission (SEC) guidelines governing fund liquidity.

Read more…

TOPICS: Bond FundBondsEquity InvestingExchange-Traded FundsFinancial MarketsFinancial StabilityFixed IncomeFund GovernanceFund RegulationMutual Fund

How SIFI Designation Could Undermine Fund Governance: Parsing the Fed’s Proposal for GE Capital

By Paul Schott Stevens

June 16, 2015

Fund boards and independent directors have a long history of serving shareholder interests, yet today they face an alarming prospect that could threaten their ability to continue doing so.

Read more…

TOPICS: Federal ReserveFinancial StabilityFund GovernanceFund RegulationMutual FundShareholderTreasury

Cybersecurity: Managing Risk in an Increasingly Connected World

By Todd Bernhardt

June 12, 2015

It’s increasingly obvious that we live in a world where cyber threats are evolving quickly and will remain persistent. But though such risks can never be eliminated, they can be managed, said panelists at ICI’s Operations and Technology Conference, held in conjunction with the Institute’s General Membership Meeting May 6–8 in Washington, DC.

Read more…

TOPICS: CybersecurityEventsFund GovernanceGMMOperations and Technology

“Preemptive Runs” and Money Market Fund Gates and Fees: Theory Meets Practice

By Sean Collins and Chris Plantier

August 20, 2014

A recent post on the blog of the Federal Reserve Bank of New York discusses the possibility that new rules by the Securities and Exchange Commission (SEC) allowing money market funds to temporarily impose fees or gates during times of market instability could increase the risk of preemptive runs on such funds during times of stress, rather than helping to limit destabilizing withdrawals, as the SEC intended.

Read more…

TOPICS: EuropeFederal ReserveFinancial StabilityFund GovernanceFund RegulationGovernment AffairsInternationalMoney Market FundsTreasury

Industry Leaders Reflect on Serving Investors in an Evolving World

By Christina Kilroy

June 4, 2014

Speaking on the Leadership Panel held Wednesday, May 21, at ICI’s General Membership Meeting (GMM), fund industry leaders agreed that challenges as well as opportunities abound for their businesses in today’s complex world.

Read more…

TOPICS: 401(k)EventsFederal ReserveFinancial MarketsFinancial StabilityFund GovernanceFund RegulationGMMGovernment AffairsInvestment EducationMutual FundRetirement PolicyShareholder

SEC Chair White Stresses Need for FSOC to Consult Sources for Necessary Expertise

By Rachel McTague

May 22, 2014

Securities and Exchange Commission (SEC) Chair Mary Jo White today called for the U.S. Financial Stability Oversight Council (FSOC) to use outside expertise to the degree necessary in its process of designating systemically important financial institutions (SIFIs).  She asserted that it is “enormously important for FSOC, before it makes any decision of any kind, to make sure it has the necessary expertise on any of those issues.”

Read more…

TOPICS: EventsFederal ReserveFinancial MarketsFinancial StabilityFund GovernanceFund RegulationGMMGovernment AffairsMoney Market FundsMutual FundOperations and TechnologyShareholderTradingTreasury

Updated FICCA Framework Makes Auditing Omnibus Accounts Easier, More Efficient

By Kathy Joaquin

January 27, 2014

Many financial intermediaries—such as broker-dealers, financial advisers, and retirement plan recordkeepers—provide services to fund shareholders and maintain customer account information on their own recordkeeping systems. Fund sponsors, in turn, want to ensure that intermediaries are meeting their obligations in servicing fund shareholders, and so, have been seeking oversight tools that allow them to do this efficiently and effectively. ICI recently took steps to improve one of the critical oversight tools available to the industry, through a major update of the Financial Intermediary Controls and Compliance Assessment (FICCA) engagement framework.

Read more…

TOPICS: Fund GovernanceFund RegulationMutual FundOperations and Technology

IDC Paper Assists Boards in Oversight of ETFs

By Annette Capretta

October 19, 2012

The Independent Directors Council (IDC) has issued a new paper, Board Oversight of Exchange-Traded Funds in order to assist directors of exchange-traded funds (ETFs) in performing their oversight responsibilities. The demand for ETFs has grown markedly as investors—both institutional and retail—increasingly turn to ETFs as investment options in their portfolios. With the increase in demand, sponsors have offered more ETFs with a greater variety of investment objectives. Our paper also may be useful for directors who do not currently oversee ETFs but wish to be more familiar with a board’s oversight role, including those whose fund groups may currently invest in ETFs or intend to launch ETFs in the future.

Read more…

TOPICS: Exchange-Traded FundsFund Governance

Yes, Your Fund’s Board Is Watching Out for You

Amy Lancellotta

June 12, 2012

A recent Wall Street Journal headline posed the question, “Is Your Fund’s Board Watching Out for You?” (June 10, 2012).

Read more…

TOPICS: Fund Governance

MarketWatch Misunderstands Important Role of Mutual Fund Directors

By Amy Lancellotta

May 15, 2012

Shareholders deserve better than a recent MarketWatch column’s clear misunderstanding of a mutual fund director’s work. To correct just a few points:

Read more…

TOPICS: Fund Governance

Independent Directors and Trustees Deeply Concerned About More Changes to Money Market Funds

By Amy Lancellotta

May 9, 2012

As the SEC continues to consider flawed proposals that would have far-reaching consequences for money market funds, two groups representing mutual fund independent directors and trustees released a joint statement registering their deep concerns about any further changes to the regulation of these funds.

Read more…

TOPICS: Fund GovernanceMoney Market Funds

Funds' Board Structures Promote Efficiencies and Cost Savings for Shareholders

By Amy Lancellotta

December 5, 2011

Reporters, academics, and others who are unfamiliar with investment companies sometimes question the unusual structure of fund boards. Unlike operating companies—where each company as a rule is overseen by its own board—multiple funds in a complex typically share common boards. In Overview of Fund Governance Practices, 1994-2010, we found that 83 percent of fund complexes use a “unitary board” (one board for all their funds), while 17 percent use “cluster boards” (two or more boards, each overseeing a group of funds within the complex).

Read more…

TOPICS: Fund Governance

ICI and IDC Oppose SEC’s One-Size-Fits-All Approach to Proxy Access

By ICI Viewpoints

December 8, 2010

Read more…

TOPICS: Fund Governance

SEC Considerably Understates Costs of Rule 12b-1 Reform Proposal

By ICI Viewpoints

December 1, 2010

Following up on our November comment letter to the Securities Exchange Commission, ICI conducted and submitted our own cost-benefit analysis of the SEC’s proposal to replace Rule 12b-1. 

Read more…

TOPICS: Fund GovernanceFund Regulation

ICI Research Shows How Funds Have Addressed Changing Mix of Proxy Proposals

By ICI Viewpoints

November 10, 2010

New ICI research on trends in proxy voting by mutual funds finds that the 2007–2009 financial crisis altered the mix of proxy proposals funds voted on. Our economists’ examined more than 10 million fund votes cast during this period. 

Read more…

TOPICS: Fund Governance

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