WASHINGTON Oct 13 The top U.S. securities
regulator lightened some requirements in its final draft of a
rule intended to ensure mutual funds have enough liquidity to
cover a wave of redemptions, which it is set to approve later on
The three members of the Securities and Exchange Commission
will vote on a final version that exempts "in kind"
exchange-traded funds, those that honor redemptions in
securities instead of cash, from some of its requirements.
The new version also keeps in place a requirement that funds
keep on hand a certain level of assets that can be converted
into cash in three days, but leaves it to the funds' boards to
decide how to rectify any dip below that threshold. In the same
vein, boards can decide how to respond when a fund holds more
than 15 percent in illiquid assets within 30 days, according to
materials presented by the commission ahead of its vote.
Under the rules funds have to classify investments into the
categories of highly liquid, moderately liquid, less liquid, and
illiquid, and also would be permitted to classify investments by
asset class. The first draft released more than a year ago had
proposed stricter definitions of categorizing investments.
The commission will consider allowing funds to use "swing
pricing," where trading costs are passed on to shareholders
through a calculation of net asset value in a separate vote.
(Reporting by Lisa Lambert; Editing by Meredith Mazzilli)