Keeping an eye on Washington

Six measures that could affect the mutual fund industry: 1. Mutual funds or fund companies could be designated systemically important financial institutions by the Financial Stability Oversight Council, bringing with it regulation by the Fed and substantial capital requirements. 2. Provisions in Dodd-Frank could bring transparency to opaque investments such as interest rate swaps. 3. Under a recent SEC rule, credit ratings will not be used to determine whether investments meet minimum credit risks, making it harder to determine creditworthiness. 4. Hedge fund advisers who have to register with the SEC may decide that if they are going to be regulated, they might as well start a mutual fund, increasing competition for existing funds. 5. Under a proposal by the President's Working Group on Financial Markets, a bank would be established to buy securities from money market funds, limiting liquidity concerns during periods of financial stress. 6. The SEC's efforts to eliminate or change 12(b)-1 fees have been put on the back burner.