The SEC is bringing up for a vote elements of the liquidity risk-management rule proposal it froze in May and withdrew for a rewrite in July.
The commission will hold an open meeting Aug. 28 to vote on whether to adopt new reporting requirements for Forms N-PORT and N-CEN, according to a schedule update posted Aug. 21.
The announcement did not say what the changes to be considered might be. It did not connect the changes coming up for a vote with requirements in the now-withdrawn liquidity risk-management rule that would have changed the frequency of N-PORT and N-CEN reporting from a quarterly schedule with a 60-day grace period to monthly reports that had to be filed within 30 days after the end of the month.
The connection comes from a second agenda suggesting the SEC might issue “Guidance on Open-End Fund Liquidity Risk Management Programs.”
The juxtaposition between the two – according to sources involved in the industry’s fight with the SEC – makes it likely the amendments up for a vote are similar to those in the liquidity swing-pricing rule that was put on hold in May and withdrawn in July, when it was reclassified in the SEC’s Spring 2024 regulatory agenda update as waiting to be reproposed in April 2025.
An SEC spokesperson declined via email to clarify the source of the amendments or offer any further details other than those included in the meeting’s Sunshine Act Notice, which listed the N-PORT and N-CEN amendments as” matters to be considered” but left out the agenda item about “Guidance” that was included in the meeting agenda.
“Guidance” not regulation
The proposal, which would have mandated the use of swing pricing by open-end funds and required an early close to accommodate the changes, generated a storm of protest from the investment industry after it was proposed in 2022, including an unprecedented protest from more than 30 fund boards that submitted negative comment letters signed by the full board.
The decision to withdraw the proposal means the SEC can’t pass significantly prescriptive parts of the liquidity rule without re-issuing a proposal for public comment, though it probably could get away with changing the frequency of reports that are already required, sources said.
The second agenda Item about offering “guidance” about liquidity risk management could be a way to make the point that the SEC still believes in the proposal, sources said.
That insistence would be consistent with enthusiastic support SEC chair Gary Gensler expressed during the controversy repeatedly rejecting the industry’s objections to the rule and insisting even while announcing in May that the proposal would be put on hold, that some level of reform was necessary.
The result would be a kind of “best practices” statement from the SEC that could affect future interpretations of existing rules without adding significant new requirements.
