Date: March 28, 2016

Issue: Derivatives

To: U.S. Securities and Exchange Commission

Filing Type: Regulatory 

Description: CCMC appreciates the opportunity to comment on proposed Rule 18f-4 (the “Proposed Rule”), which modifies the regulatory regime governing the use of derivatives by registered investment companies (“RICs”) and business development companies (“BDCs” and, together with RICs, “funds”). CCMC generally supports the Securities and Exchange Commission’s (the “Commission”) goal of updating the derivatives regulatory regime applicable to RICs and BDCs under Section 18 of the Investment Company Act of 1940 (the “1940 Act”).

However, CCMC has serious concerns with respect to the new limits being contemplated on the use of derivatives and financial commitment transactions and the limits’ ultimate impact on capital formation. Simply put, for many different types of funds, the Proposed Rule is completely unworkable and will force them to (1) charge investors more, given the substantially higher amount of capital that must be held when using derivatives; (2) fundamentally restructure their investment strategies; or (3) deregister and either exit the market completely or reorganize as private funds.

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