The SEC today agreed to seek comments on what elements of trading costs mutual funds should be required to disclose in their financial statements. The SEC also will ask investors whether soft-dollar arrangements should be disclosed as an expense in mutual funds' financial statements.
The SEC is asking for comments on whether mutual funds should have to disclose only their commission costs; to disclose all elements of trading costs, including the intangibles; to disclose them in a range from high to low; to disclose the gross and net returns to investors before and after trading costs; or to disclose them in a narrative rather than in a table.
"To the extent you put more sunlight and highlight these costs, hopefully questions will be asked about these (soft dollar and revenue sharing) arrangements," said Paul Roye, director of the SEC's division of investment management.
A 60-day comment period has been set.