The SEC has adopted a new rule requiring open-end registered funds to establish liquidity risk management programs. New Rule 22e-4 will require registered funds to implement a program that assesses liquidity risk, classify securities into one of four liquidity categories, set a liquidity minimum, and report violations of overall portfolio illiquidity limits. The liquidity risk program also requires Board oversight including the designation of a fund officer to administer the program. The SEC also adopted new monthly portfolio disclosure rules for registered funds as well as a rule allowing funds to use swing pricing. Fund complexes with more than $1 Billion in net assets must comply with the liquidity risk management rule by December 1, 2018.
OUR TAKE: The new rules will require a great deal of additional work for the folks in operations, legal and compliance. The Oper-Pros will need to figure out how to pull and classify the data. The lawyers will have to create additional disclosures. And, the Compli-Pros will likely be the appointed officers to administer the programs.