Clifford Chance

New SEC Rule Proposal Seeks To Mandate Swing Pricing And Impose A Hard Close For Mutual Funds

November 22, 2022

On November 2, 2022, the U.S. Securities and Exchange Commission (the "SEC" or the "Commission") proposed comprehensive amendments to various rules under the Investment Company Act of 1940, as amended (the "Investment Company Act" or the "1940 Act"), concerning liquidity and dilution management for registered open-end funds, such as mutual funds (the "Proposal"). Among other things, the Proposal would amend Rule 22e-4 under the Investment Company Act to address ostensible weaknesses in open-end funds' liquidity risk management programs. The Proposal would also amend Rule 22c-1 to require open-end funds, other than money market funds and exchange-traded funds ("ETFs"), to implement swing pricing, and would impose a "hard close" for purchases and redemptions of mutual fund shares. The Proposal, if adopted in the proposed form, would have a far-reaching impact on the mutual funds industry. This client briefing provides an overview of the material changes included in the Proposal.

Download PDF