SEC Proposes Regulatory Changes To Open-End Fund Liquidity Requirements

On November 2, 2022, the U.S. Securities and Exchange Commission ("SEC"), by a vote of 3-2, proposed amendments to rules under the Investment Company Act of 1940 that would modify the existing liquidity risk management program requirements for open-end funds other than money market funds ("open-end funds" or "funds") and mandate that open-end funds (excluding exchange-traded funds (ETFs)) engage in swing pricing. The proposed amendments reflect the SEC's experience with the current liquidity rules since they were adopted in 2016, as well as the SEC's assertion that the market events of March 2020 at the outset of the pandemic warrant further regulatory requirements to enhance open-end fund liquidity in future stressed conditions.