SEC Proposes New Liquidity Management Rules for Mutual Funds and ETFs

September 22, 2015

Earlier today, the U.S. Securities and Exchange Commission unanimously approved proposals that would require open-end funds, including mutual funds and exchange-traded funds, to comply with new liquidity management rules. The proposals are generally intended to limit the risks that funds would be unable to meet investor redemption requests and to potentially minimize the dilutive impact of fund shareholder transactions. According to SEC Chair Mary Jo White, “[p]romoting stronger liquidity risk management is essential to protecting the interests of the millions of Americans who invest in mutual funds and exchange-traded funds.”

The proposals represent potentially significant changes to current liquidity principles that apply to funds, and, if adopted, will likely require significant changes to fund operations, disclosure and reporting requirements. The proposals are the second in a series of rule proposals this year by the SEC to address certain potential risks in the fund industry and modernize fund reporting and disclosure. A summary of the proposals is provided below.

Read "SEC Proposes New Liquidity Management Rules for Mutual Funds and ETFs."