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ARTICLE · 06 APRIL 2018

Implementation Delay And Q&As For Fund Liquidity Rule

Carlton Fields
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On February 21, the SEC approved a six-month extension for mutual funds to comply with the classification (bucketing) requirements and related elements of its new liquidity rule.

United StatesFinance and Banking
Chip Lunde
Chip Lunde

On February 21, the SEC approved a six-month extension for mutual funds to comply with the classification (bucketing) requirements and related elements of its new liquidity rule. The extension was responsive to comments from the Investment Company Institute and others that fund vendors would not be ready to provide the necessary services by the deadline. The new compliance deadline for the rule's bucketing requirements is June 1, 2019 for fund complexes with more than $1 billion in assets, and December 1, 2019 for smaller firms.

Also on February 21, the SEC staff issued 19 additional Q&As regarding compliance with the rule's requirements. In the new guidance, the staff confirmed previous indications that funds would enjoy significant flexibility in meeting classification requirements and testing for liquidity, but indicated there were limits to such flexibility. For example, the staff said:

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