What happened
The US Securities and Exchange Commission (SEC) adopted amendments on 4 November 2026 to the rules that decide which registered investment companies, investment advisers and business development companies count as “small entities”. The definition matters for the Regulatory Flexibility Act (RFA), a US law that asks federal agencies to weigh how their rules affect small businesses.
The SEC said the old asset-based thresholds were set decades ago, before the asset management industry grew substantially. SEC Chairman Paul S. Atkins said the definition had not been updated in nearly 30 years.
The four changes
- The asset-based thresholds under which these firms are deemed small entities will be increased.
- The method for adding up the assets of related funds will be updated.
- The separate total-assets threshold for investment advisers will be eliminated.
- The thresholds will be adjusted for inflation by order every 10 years.
The SEC has not given the new threshold figures in its announcement. The adopting release will be published on the SEC website and in the Federal Register, the US government’s official journal of rules.
What it means for you
This is a rulebook change for regulators and fund firms, not a new obligation for individual investors. It affects how the SEC studies the cost of its future rules. When the agency drafts a rule, it must analyse the impact on small entities, and a wider, more current definition means that analysis covers a more meaningful group of firms.
In the SEC’s words, the aim is to minimise the significant economic impact of its rules on these market participants. If you invest through US funds, you will not see a direct change in your holdings. Indian readers who use US-registered funds or advisers can check the adopting release once it is out for the exact thresholds.
For basics on how funds and exchange-traded products differ, see our guide on ETF vs index fund.
Background
The RFA requires agencies to consider alternatives that reduce burdens on small entities. The SEC says it tailors its regulations to the characteristics of the firms it oversees and performs a regulatory flexibility analysis under the law.
Business development companies are a type of firm covered by the amendments alongside registered investment companies and advisers. Aggregating related funds’ assets means deciding how funds under common management are counted together when testing against a size limit.
What to watch next
Watch for the publication of the adopting release in the Federal Register, which will set out the new thresholds and when the changes apply.
