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Mutual Funds See Win in Fight to Blunt SEC ‘Swing Pricing’ Plan

The SEC will likely revamp a plan that would have forced asset managers to change part of their pricing models.

(Bloomberg) -- The mutual-fund industry claimed victory on Monday after the US Securities and Exchange Commission signaled it will likely revamp a plan that would have forced asset managers to change part of their pricing models.

The SEC’s latest rulemaking agenda indicates its staff is preparing to recommend reproposing the agency’s November 2022 bid to make it costlier for investors to redeem shares during times of extreme market tumult. The original plan, which would have imposed so-called swing pricing during periods of high redemptions, had drawn fierce pushback from the industry.

Critics said the proposed pricing mechanism would harm investors and could exacerbate moves to low-cost exchange-traded funds from mutual funds. The SEC, meanwhile, said the plan would bolster the market in times of significant volatility. 

“We thank the SEC for recognizing the myriad issues contained within the proposal and look forward to continuing our work with the commission on ways to help retail investors build a secure financial future,” the Investment Company Institute trade group said in an emailed statement.  

In its updated regulatory agenda released late last week, the SEC didn’t provide details on which parts of the proposal might be redrafted or how it would change the swing-pricing plan. Gensler said in May that the SEC was working with US banking regulators to close gaps in overseeing open-end funds, as well as funds managed by bank trust departments.

Read more: Funds Managed by Bank Trust Departments Draw SEC Scrutiny

On Monday, SEC Chair Gary Gensler said the agency was working to make sure that markets are resilient and function well for investors through its updated regulatory agenda. “We benefit in all of our work from robust public input regarding proposed rule changes,” he said in a statement about the overall agenda, which includes more than two dozen rule plans. 

A revamped rule for mutual fund liquidity could be proposed by April 2025, the regulator said. The target date is non-binding, but the far-off deadline indicates a reproposal may not come until after the November US elections. 

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