SEC plans ‘pose reverse-engineering threat to quant funds’

Managers say proposed disclosure rules would lead to less efficient markets

For the past two years, the US Securities and Exchange Commission has worked on a long list of proposed rules which, broadly speaking, assume that greater transparency in the financial markets would be a good thing.

Quant hedge funds, however, might disagree. They believe the proposals, which would require them to report more data, could lead to their strategies being reverse-engineered by rival firms. Although other active investors could also suffer, quant firms – with their repeatable