[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3203 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 3203
To amend the Investment Company Act of 1940 to impose certain
requirements relating to the use of market indexes, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 2, 2023
Mr. Rubio introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Investment Company Act of 1940 to impose certain
requirements relating to the use of market indexes, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Index Provider Transparency and
Accountability Act''.
SEC. 2. MARKET INDEXES.
(a) In General.--The Investment Company Act of 1940 (15 U.S.C. 80a-
1 et seq.) is amended--
(1) in section 8(b) (15 U.S.C. 80a-8(b))--
(A) in paragraph (4), by striking ``and'' at the
end;
(B) in paragraph (5), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(6) a disclosure of--
``(A) whether the registrant intends to track the
returns of, or benchmark against, a specific index of
securities; and
``(B) if the registrant intends to track the
returns of, or benchmark against, a specific index of
securities--
``(i) the identity of the index provider;
``(ii) any involvement of the registrant in
designing the index;
``(iii) any ability of the registrant to
influence the construction or composition of
the index; and
``(iv) any licensing fees paid by the
registrant to the index provider.'';
(2) in section 13 (15 U.S.C. 80a-13)--
(A) by redesignating subsection (c) as subsection
(d); and
(B) by inserting after subsection (b) the
following:
``(c) Change in Investment Policy Relating to Indexing.--
``(1) In general.--With respect to a registered investment
company that tracks the returns of, or benchmarks against, a
specific index of securities, if a deviation with respect to
that index occurs such that the deviation would be permitted
under subsection (a)(3) if made directly by the investment
company only if authorized by the vote of a majority of the
outstanding voting securities of the investment company, the
investment company may not continue to so track, or benchmark
against, the index, unless so authorized by such a vote or by a
vote by the board of directors of the investment company.
``(2) Rule of construction.--For the purposes of paragraph
(1), a deviation with respect to an index that requires a vote,
as described in that paragraph, includes such a deviation that
adds new, or increases the weighting of, securities--
``(A) of issuers that are headquartered or
incorporated in the People's Republic of China; or
``(B) that are listed on exchanges in the People's
Republic of China.''; and
(3) in section 30 (15 U.S.C. 80a-29)--
(A) in subsection (b)(1), by striking ``this title;
and'' and inserting the following: ``this title, which
shall include--
``(A) information regarding whether the registered
investment company tracks the returns of, or benchmarks
against (or intends to track, or benchmark against), a
specific index of securities; and
``(B) if the registered investment company engages
in, or intends to engage in, the action described in
subparagraph (A), the information described in section
8(b)(6)(B) with respect to the index described in
subparagraph (A) of this paragraph; and''; and
(B) by adding at the end the following:
``(k) Annual Disclosure Regarding Chinese Securities.--
``(1) In general.--Each registered investment company shall
annually transmit to the stockholders of the investment company
a report containing information regarding, with respect to any
security owned by the investment company that is issued by an
issuer that is headquartered or incorporated in the People's
Republic of China or listed on an exchange in the People's
Republic of China--
``(A) the percentage of the securities of that
issuer that are owned by governmental entities in the
People's Republic of China;
``(B) whether the entities described in
subparagraph (A) have a controlling financial interest
with respect to the issuer;
``(C) the name of any official of the Chinese
Communist Party who is a member of the board of
directors of--
``(i) the issuer; or
``(ii) the operating entity with respect to
the issuer;
``(D) whether the articles of incorporation of the
issuer (or equivalent organizing document) contains any
charter of the Chinese Communist Party, including the
text of any such charter; and
``(E) whether the investment company was unable to
obtain any of the information required under any of
subparagraphs (A) through (D).
``(2) Inclusion permitted.--A report that a registered
investment company is required to transmit under paragraph (1)
may be included in a report that the investment company is
required to transmit under subsection (e).''.
(b) Technical and Conforming Amendment.--Section 401(a) of the
Comprehensive Iran Sanctions, Accountability, and Divestment Act of
2010 (22 U.S.C. 8551(a)) is amended, in the matter preceding paragraph
(1), by striking ``section 13(c)(1)(B)'' and inserting ``section
13(d)(1)(B)''.
(c) Updates to Rules.--Not later than 1 year after the date of
enactment of this Act, the Securities and Exchange Commission shall
make any updates to the rules of the Commission that are necessary as a
result of this section and the amendments made by this section.
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