The U.S. Securities and Exchange Commission has retreated from a plan that would have forced many mutual funds to overhaul their pricing models.
The original proposal would have imposed so-called swing pricing during periods of high redemptions, making it costlier for investors to cash out when markets are roiled. It drew strong opposition not only from the industry but also from Democratic lawmakers who warned the measure could impose heavy burdens on investors saving for their retirements. More than 60% of 401(k) plan assets are held in mutual funds.
The SEC's meeting agenda for Wednesday made no mention of a swing-pricing mandate for the $24 trillion asset class. The regulator instead approved more-frequent disclosures of mutual-fund performance that had accompanied the swing-pricing measure. It also decided to address heavy redemptions by issuing new guidance on existing liquidity-risk-management rules.
The financial regulator is requiring mutual funds to report portfolio holdings on a monthly basis rather than quarterly, and that data will be made public 60 days after the month's end. The disclosures are "particularly important in enhancing the commission's ability to respond during times of stress or fast-moving events," SEC Chair Gary Gensler said in his remarks.
Republican Commissioner Mark Uyeda, who voted against the disclosures, said making the data public on a monthly basis was "highly concerning" because it would expose investment funds' strategies.
"If fund investment advisers are not compensated for their skill in conducting fundamental investment research and effective trading strategies, then such efforts will be less likely to occur at all — and the public good of price discovery will be significantly harmed," he said.
