Proposed Mutual Fund Pricing Rules Will Disadvantage VAs: ACLI

This is called the "hard" 4 p.m. close.

However, orders processed by other intermediaries up until the 4 p.m. hard close would obtain the next days value, Wilkerson says, because the orders would not arrive at the investment company by the hard close.

Wilkerson says that while ACLI supports the thrust of the proposal, it should be competitively neutral.

The competitive imbalance, he says, can be corrected in several ways. For example, Wilkerson says, mutual funds conducting business through "other" intermediaries can incorporate terms and conditions into their contracts, that include right of inspection and review, to ensure compliance.

Another possibility, he says, is a clearinghouse that can process orders nearer to the hard close.

The SEC, Wilkerson says, should allow several solutions to the problems of late trading, rather than a single solution, so long as they successfully thwart abuses.

"In this way, competition will be preserved and fraud will be terminated," Wilkerson says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 13, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.