SEC votes to extend compliance date for liquidity classification
23 February 2018 Washington DC
Image: Shutterstock
The Securities and Exchange Commission (SEC) has voted to extend its deadline on open-end funds complying with certain elements of the its liquidity risk management programme rule.
According to the SEC, the deadline, which will be extended by six months, will provide funds additional time to complete implementation of the final rule's classification requirement.
Other provisions of the rule, including the requirements to adopt a liquidity risk management programme and to limit illiquid investments to 15 percent of the fund鈥檚 portfolio, will go into effect as originally scheduled.
The SEC adopted the open-end fund liquidity rule in October 2016, in an effort to promote more effective liquidity risk management programmes in the fund industry.
The compliance date for implementation of the classification and classification-related elements of the liquidity rule is 1 June 2019 for larger fund groups and 1 December 2019 for smaller fund groups.
The other requirements will go into effect as originally scheduled鈥�1 December, 2018, for larger fund groups, and 1 June, 2019, for smaller fund groups.
The SEC has also issued an additional set of FAQs related to the liquidity rule, focusing on questions relating to the liquidity classification process.
It said that these FAQs should provide additional clarity to funds as they implement the final rule during the additional time that the SEC has provided.
Chairman of the SEC Jay Clayton commented: "[The] commission action is a measured step designed to help preserve key market oversight and investor protection benefits of the commission's liquidity rule, while addressing certain concerns that have been raised since adoption.鈥�
He added: 鈥淚 expect that our action will promote a smoother and more effective implementation process for the rule. I appreciate the valuable engagement with stakeholders we have received thus far, and welcome further engagement, particularly from fund investors, as the implementation process continues."
According to the SEC, the deadline, which will be extended by six months, will provide funds additional time to complete implementation of the final rule's classification requirement.
Other provisions of the rule, including the requirements to adopt a liquidity risk management programme and to limit illiquid investments to 15 percent of the fund鈥檚 portfolio, will go into effect as originally scheduled.
The SEC adopted the open-end fund liquidity rule in October 2016, in an effort to promote more effective liquidity risk management programmes in the fund industry.
The compliance date for implementation of the classification and classification-related elements of the liquidity rule is 1 June 2019 for larger fund groups and 1 December 2019 for smaller fund groups.
The other requirements will go into effect as originally scheduled鈥�1 December, 2018, for larger fund groups, and 1 June, 2019, for smaller fund groups.
The SEC has also issued an additional set of FAQs related to the liquidity rule, focusing on questions relating to the liquidity classification process.
It said that these FAQs should provide additional clarity to funds as they implement the final rule during the additional time that the SEC has provided.
Chairman of the SEC Jay Clayton commented: "[The] commission action is a measured step designed to help preserve key market oversight and investor protection benefits of the commission's liquidity rule, while addressing certain concerns that have been raised since adoption.鈥�
He added: 鈥淚 expect that our action will promote a smoother and more effective implementation process for the rule. I appreciate the valuable engagement with stakeholders we have received thus far, and welcome further engagement, particularly from fund investors, as the implementation process continues."
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