The European Systemic Risk Board (the Board) published a recommendation that the European Union should adopt rules to prevent funds from taking on excessive debt and from allocating inadequate reserves to compensate for assets that are hard to sell.  The board went so far as to suggest stronger liquidity stress tests, improved liquidity management and tighter supervision.  Private funds whose portfolios are comprised of leveraged and complex derivatives are paying close attention to this call for action by the Board as it comes on the heels of a separate announcement detailing the International Organization of Securities Commissions’ (IOSCO)  focus on improving how complex derivative products are being offered to retail investors.  IOSCO is proposing everything from new leverage limits, minimum margin requirements and a host of other measures for products like binary options and contracts for differences.  Asset managers who sought to reposition their derivative strategies in registered funds will need to monitor these developments closely with their counsel and consider repositioning certain strategies through over-the-counter transactions.  While IOSCO’s proposal impacts EU as well as U.S. regulators alike, the impact would be minimal in the United States considering existing caps on Reg T and portfolio margining leverage capabilities along with restrictions on U.S. retail persons trading contracts for differences.  For those who have benefitted from arranged financing or enhanced leverage platforms generally offered through UK broker dealers, it is important to determine whether the existing leverage model can be repositioned under alternative portfolio margining/stress models by consulting with qualified counsel.