II 117th CONGRESS 1st Session S. 1743 IN THE SENATE OF THE UNITED STATES May 20, 2021 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.

1. Short title This Act may be cited as the Index Provider Transparency and Accountability Act . 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.