The Securities and Exchange Commission has reopened the comment period on a proposal that would expand the scope of assets subject to custodial oversight.
The proposal, unveiled in February, would broaden the agency's custody rule, which was originally adopted in 1962 and requires investment advisers "to safeguard client funds and securities in their possession or where they have authority to obtain possession of them," according to an SEC fact sheet.
The SEC is proposing an expansion of the custody rule to include all assets — including art, cash, commodities, cryptocurrency and non-traditional assets — and require advisers to maintain those assets with a qualified custodian.
The proposal's initial comment period ended May 8, but on Wednesday, the SEC finalized a major rule to require increased disclosure from private fund advisers and prohibit certain fee arrangements. That final rule also requires a registered investment adviser to obtain an annual financial statement audit of each private fund it advises in accordance with the audit provision of the current custody rule.
The SEC on Wednesday said it will reopen the comment period on its custody rule proposal to provide stakeholders additional time to assess how the new audit provision in the private funds rule impacts the proposal.
The new comment period will be open for 60 days after notice is published in the Federal Register.
During the proposal's initial comment period, several industry groups voiced concern that the rule would significantly burden the investment community.