The Securities and Exchange Commission’s proposed rules on funds’ use of derivatives would require funds that enter into derivatives transactions to comply with certain conditions, including limiting portfolio leverage to prevent undue speculation, maintaining segregated assets to enable funds to meet their obligations and, for those funds that engage in more than a limited amount of derivatives or that use complex derivatives, establishing a formal derivatives risk management program to ensure that they are using derivatives as intended. CFA supports the proposed rules, which will better protect investors from derivatives-related risks and fulfill the purposes and concerns underlying the Investment Company Act.