The staff of the Securities and Exchange Commission has recently taken the position that registered investment advisers that trade loans and other assets (including derivatives) on behalf of separately managed accounts that do not settle “delivery versus payment” (“DVP”), have “custody” of client assets under the Investment Advisers Act (the “Act”) and therefore must comply with the requirements of the custody rule. (The custody rules do not apply to trades on behalf of CLOs or mutual funds). This week the LSTA hosted a webinar that focused on this surprising regulatory development which could have very costly consequences.
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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.