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ARTICLE · 11 NOVEMBER 2016

New Liquidity And Swing Pricing Rules For US Mutual Funds

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On October 13, 2016, a unanimous US Securities and Exchange Commission adopted far‑reaching rules intended to address mutual fund liquidity risks.

United StatesFinance and Banking
A&O Shearman
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On October 13, 2016, a unanimous US Securities and Exchange Commission adopted far‑reaching rules intended to address mutual fund liquidity risks. On the same day and by a divided (two to one) vote, the SEC adopted new mutual fund reporting rules and an optional "swing pricing" rule.

Core elements of the liquidity rule package are:

  • Mandated liquidity risk management programs. Every mutual fund and open-end ETF (except for money market funds and unit investment trusts) will implement a formal liquidity risk management program, generally to include liquidity risk assessments, a "highly liquid investment minimum" (for many funds) and liquidity classifications.
  • Disclosure. There will be increased disclosure around policies for meeting redemptions. New Form N-PORT will require detailed liquidity information, notably position level liquidity classifications (that will not be made public) and aggregate liquidity information (that will be made public).

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