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ARCHIVE
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. Every year, we strive to educate fund independent directors, bring them together for meaningful dialogue, voice their perspective in policy debates, and promote public understanding of the important role they play in the regulated fund industry.
Yet the ways we carry out that mission are always evolving. Whenever we consider a new initiative—or look to build on our past successes—we take stock of industry trends, survey the regulatory environment, and incorporate the ideas of the fund director community, so that we can tailor our work to directors’ changing needs.
Our efforts to educate directors in 2017 centered on our new Foundations for Fund Directors orientation program. Foundations, which we designed to help newer directors bolster their core skills and succeed in their role, debuted late last summer with an online course and in-person training in Boston.
We also held our annual Fund Directors Workshop and Fund Directors Conference, where directors gathered with industry leaders, operations professionals, board counsel, and others for discussion on the hot-button issues facing fund boards today—and for the unparalleled networking opportunities that have long set these conferences apart as the fund director community’s premier events.
In addition, we hosted seven new webinars, helping directors navigate an array of complex regulatory issues; 16 regional chapter meetings, facilitating discussions among directors on governance practices and approaches to handling new regulatory responsibilities; and eight industry segment conference calls, enabling directors to participate in dialogue tailored to their specific board roles. We thank everyone who joined us for our events in 2017, and hope you’ll join us again in 2018.
On the advocacy front, we wrote to the new director of the Securities and Exchange Commission’s Division of Investment Management (IM), Dalia Blass, asking her to take a fresh look at all the board responsibilities that have accumulated over the years. We believe that such a review should aim to modernize these responsibilities to strengthen directors’ ability to serve fund shareholders. IM’s new initiative to review and reevaluate directors’ responsibilities, announced in December, looks to be a big step toward that goal.
Our work in this area will ramp up in 2018—but that will be far from the only item on our agenda. Thanks to the efforts of our talented staff and Governing Council, we’ll be working on a range of projects to support fund directors in their important work on behalf of fund shareholders.
Indeed, more than 100 million shareholders depend on directors’ robust oversight to protect their interests. At IDC, we believe that directors are best equipped to supply that oversight when they can continually develop their knowledge and skills, exchange ideas with their peers on other boards, and operate in a regulatory environment that recognizes their conventional oversight role. We look forward to further strengthening our commitment to these principles in 2018.
Amy B. R. Lancellotta is the managing director of the Independent Directors Council.
Permalink: https://www.ici.org/viewpoints/view_18_idc_17_annual_review
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.
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.
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...
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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).
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:
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.
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).
TOPICS: Fund Governance
ICI and IDC Oppose SEC’s One-Size-Fits-All Approach to Proxy Access
By ICI Viewpoints
December 8, 2010
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.
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.
TOPICS: Fund Governance
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