The Securities and Exchange Commission has agreed to a six-months extension to the deadline by which open-end funds must comply with certain elements of the Commission's liquidity risk management program rule.
The new compliance date will provide funds with "additional time to complete implementation of the final rule's classification requirement, along with specified other elements that are tied to the classification requirement,” the Commission said. “ Other provisions of the rule that provide important investor protection benefits, including the requirements to adopt a liquidity risk management program and to limit illiquid investments to 15 percent of the fund’s portfolio, will go into effect as originally scheduled.”
Additional information and guidance can be found in an online set of Frequently Asked Questions.
The Commission adopted the open-end fund liquidity rule in October 2016, in an effort to promote effective liquidity risk management programs in the fund industry. Management of liquidity risks is important to funds' ability to meet their statutory obligation—and their investors’ expectations — regarding redemption of their shares. Since adoption, staff has engaged in extensive outreach to identify any potential issues associated with the effective implementation of the rule.
Pursuant to the rule, the compliance date for implementation of the classification and classification-related elements of the liquidity rule is June 1, 2019, for larger fund groups, and Dec. 1, 2019, for smaller fund groups. The other requirements will go into effect as originally scheduled: Dec. 1, 2018, for larger fund groups, and June 1, 2019, for smaller fund groups.
The Commission anticipates considering in the future proposed amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for open-end management investment companies.
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