Regulators Maintain Flexibility: Extension of Deadline for Data Reporting by Investment Advisors

US regulators have extended the deadline for new reporting requirements for investment advisers of private funds at the last minute. The regulations, which were adopted by two US market supervisory authorities in February 2024, are intended to enable more comprehensive disclosure of information to improve government oversight of the rapidly growing private markets in recent years. In a 3-to-1 vote, the US Securities and Exchange Commission (SEC) decided on Wednesday, just one day before the regulations were to take effect, to postpone the compliance deadline to the end of the year. The Commodity Futures Trading Commission also supported the deadline extension, having already decided on such a postponement in January. According to SEC Chairman Paul Atkins, more time is necessary to engage with applicants and assess the relevance of the required data. Private fund operators had repeatedly urged the SEC to reconsider these and other regulations, viewing them as unnecessary and costly. Advisors now have until October 1, 2025, to meet the new requirements. The collected data, including reporting of events indicating significant stress, would be made available to the Financial Stability Oversight Council, which brings together key financial regulators in the US to monitor systemic risks. Regulators have been warning for years that the growing private markets pose potential risks, as they are more opaque and less strictly regulated than traditional markets. In the wake of deregulation under President Donald Trump, federal agencies have begun to loosen regulations. However, Caroline Crenshaw, the only Democratic member of the SEC, emphasized that the SEC and FSOC rely on this detailed data to better understand when the private markets are exposed to turmoil that could affect the entire financial system.