The Securities and Exchange Commission (SEC) announced on December 8, 2017, that it would postpone the compliance date for filing new reports on Form N-PORT— one of the SEC’s new measures to modernize and enhance disclosures for investment companies (the Modernization Rules). The postponement follows the SEC’s September 2017 acknowledgment that its EDGAR electronic filing system had been hacked in 2015.
The postponement means that the reporting deadline for large firms is April 30, 2019, while the new deadline for smaller complexes is one year later on April 30, 2020. Note, however, that larger fund complexes with net assets of $1 billion or more will still be required to maintain Form N-PORT information internally and make it available to the SEC upon request in lieu of filing the form on EDGAR, beginning with the initial compliance date of June 1, 2018.
Form N-PORT in a Nutshell
Form N-PORT, which will replace the current quarterly filing on Form N-Q, requires all registered investment companies (other than money market funds, small business investment companies and unit investment trusts that operate as exchange-traded funds) to report portfolio information in Extensive Markup Language format. Reports on Form N-PORT will be filed with the SEC separately for each series of a fund company on a monthly basis (no later than 30 days after the end of each month).
The adoption of Form N-PORT results in a significant increase in the volume of reporting obligations for investment companies. In particular, Form N-PORT requires new disclosure of:
- Derivative investments
- Certain risk metric calculations that measure a fund’s exposure and sensitivity to changes in market conditions, such as changes in asset prices, interest rates or credit spreads
- The fund’s monthly returns
- Net realized gains or losses and net change in unrealized appreciation or depreciation for the fund on its derivative and non-derivative investments, respectively
- Certain fund activities, such as securities lending, repurchase agreements and reverse repurchase agreements, including information about the counterparties
- Certain information regarding the liquidity of a fund’s holdings and the fund’s liquidity risk management practices pursuant to the SEC’s new Investment Company Liquidity Risk Management Programs rule (the Liquidity Management Rule)
Compliance with Form N-PORT will also require investment companies to obtain and report a Legal Entity Identifier (LEI) number of the registrant and each series, which is a unique identifier generally associated with a corporate entity and intended to provide a uniform international standard for identifying counterparties to a transaction. This will require funds or registrants to obtain an LEI if they have not done so already, which currently entails a one-time registration fee and a modest yearly fee to cover maintenance costs.