SEC Extends Safeguards for Funds in Foreign Banks
Published Date: 1/28/2026
Notice
Summary
The SEC is asking for comments to extend Rule 17f-5, which helps protect investment funds’ assets held by foreign banks. This rule affects fund boards and their foreign custody managers, requiring careful checks and reports to keep assets safe. No big changes or costs are expected, but the rule’s paperwork and monitoring must continue on schedule.
Analyzed Economic Effects
2 provisions identified: 0 benefits, 2 costs, 0 mixed.
Ongoing Foreign‑Custody Oversight Rules
If you run a registered investment fund or act as a foreign custody manager, Rule 17f-5 requires the fund's board to find it reasonable to rely on any delegate. The delegate must provide written reports when the fund's assets are placed with a foreign custodian or when any material change occurs, must exercise reasonable care, custody contracts must include specified or equivalent protections, and the foreign custody manager must establish a system to monitor custody arrangements.
Estimated Annual Compliance Burden and Cost
The SEC estimates up to 55 registrants could each make one response per year, requiring about 3.5 hours per response (2.5 hours of board time + 1 hour of compliance attorney time) for a total of about 192.5 hours. The staff estimates roughly 15 foreign custody managers may make 4 responses each at about 250 hours per response (about 1,000 hours per manager), producing about 16,100 hours; the combined annual burden is estimated at 16,292.5 hours and a monetized annual cost of $5,344,500. Written comments on this collection are due by March 30, 2026.
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