SEC Proposes Changes to Investment Company Liquidity Risk Management Liquidity Classification Disclosures

April 09, 2018

The U.S. Securities and Exchange Commission (SEC) on March 14, 2018 proposed a rule (Proposed Rule) that would: (i) eliminate or modify certain disclosure requirements of Form N-PORT; and (ii) add a new disclosure requirement to Form N-1A relating to the liquidity risk management rule applicable to open-end investment companies (including exchange-traded funds but excluding money market funds) (funds). If the Proposed Rule is adopted, a fund would:

  • No longer be required to disclose its aggregate liquidity classification information on Form N-PORT but, instead, would include a discussion about the operation and effectiveness of the fund’s liquidity risk management program in its annual shareholder report;
  • Be permitted to classify single investments into multiple liquidity classification “buckets” on Form N-PORT under certain specified circumstances; and
  • Disclose its holdings of cash and certain cash equivalents on Form N-PORT.

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