Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

SEC issues final rule on investment company liquidity risk management

SEC issues final rule on investment company liquidity risk management To provide an overview of the US Securities and Exchange Commission’s (SEC) recently adopted rule 22e-4 (Rule 22e-4) under the Investment Company Act of 1940, as amended (1940 Act) regarding investment company liquidity risk management programs.Design/methodology/approachReviews and summarizes the specific requirements of Rule 22e-4 to better enable investment companies and their boards to comply by the general compliance date of December 1, 2018 (smaller complexes have until June 1, 2019).FindingsThe SEC clarifies that each fund should tailor its particular Program to ensure that it is adequately assessing and managing its specific liquidity risk based on its investment strategies and risks; however, it is not expected that a fund would eliminate all adverse impacts of liquidity risk. In addition, under the final rule, while the board does have certain duties and responsibilities with respect to certain aspects of a fund’s Program, the SEC pared back much of what had been in the Proposing Release to ensure that the board’s role remains one of oversight and not management.Practical implicationsAlthough the compliance date does not occur for almost two years, funds and their boards should begin reviewing the Rule 22e-4 requirements now and developing their Program.Originality/valuePractical guidance from experienced investment management attorneys that provides insight into expectations for compliance with Rule 22e-4. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance Emerald Publishing

SEC issues final rule on investment company liquidity risk management

Download PDF
10 pages

Loading next page...
 
/lp/emerald-publishing/sec-issues-final-rule-on-investment-company-liquidity-risk-management-joJmw44fsp
Publisher
Emerald Publishing
Copyright
© 2017 Schiff Hardin LLP
ISSN
1528-5812
DOI
10.1108/joic-02-2017-0006
Publisher site
See Article on Publisher Site

Abstract

To provide an overview of the US Securities and Exchange Commission’s (SEC) recently adopted rule 22e-4 (Rule 22e-4) under the Investment Company Act of 1940, as amended (1940 Act) regarding investment company liquidity risk management programs.Design/methodology/approachReviews and summarizes the specific requirements of Rule 22e-4 to better enable investment companies and their boards to comply by the general compliance date of December 1, 2018 (smaller complexes have until June 1, 2019).FindingsThe SEC clarifies that each fund should tailor its particular Program to ensure that it is adequately assessing and managing its specific liquidity risk based on its investment strategies and risks; however, it is not expected that a fund would eliminate all adverse impacts of liquidity risk. In addition, under the final rule, while the board does have certain duties and responsibilities with respect to certain aspects of a fund’s Program, the SEC pared back much of what had been in the Proposing Release to ensure that the board’s role remains one of oversight and not management.Practical implicationsAlthough the compliance date does not occur for almost two years, funds and their boards should begin reviewing the Rule 22e-4 requirements now and developing their Program.Originality/valuePractical guidance from experienced investment management attorneys that provides insight into expectations for compliance with Rule 22e-4.

Journal

Journal of Investment Compliance – Emerald Publishing

Published: May 2, 2017

Keywords: Governance; Mutual funds; Investment Company Act of 1940; US Securities and Exchange Commission (SEC); Liquidity risk management; Rule 22e-4

There are no references for this article.