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As asset managers face heightened scrutiny from banking regulators over fears their lending and investing activities could pose broader risks to the marketplace, the SEC proposed rules that would require mutual funds and exchange-traded funds to create new programs to better manage their liquidity.
As asset managers face heightened scrutiny from banking
regulators over fears their lending and investing activities could
pose broader risks to the marketplace, the SEC proposed rules that would require mutual funds
and exchange-traded funds to create new programs to better manage
their liquidity. Under the rules, funds would need to devise plans
to ensure they can meet redemption demands from investors during
periods of market stress. These plans would require funds to
classify and review the assets in their portfolios based upon how
quickly they could be converted into cash. The proposal includes
provisions that would allow funds to charge a higher price to
investors who make withdrawals during periods of market volatility.
The plan would also permit, but not require, funds to use
"swing pricing," but calls for additional disclosures
related to swing pricing use and how the liquidity of a fund's
assets is classified.
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