On September 22, 2015, the Securities and Exchange Commission (SEC) voted to propose a new Rule 22e-4 under the Investment Company Act of 1940 (the 1940 Act), as well as amendments to its rules and forms designed to promote effective liquidity risk management for open-end funds (i.e., mutual funds and exchange-traded funds, or ETFs). Additionally, the proposed amendments would allow open-end funds (other than money market funds and ETFs) to use “swing pricing” and would enhance disclosure regarding fund liquidity and redemption practices.

The SEC’s proposals would (1) introduce a new Rule 22e-4 under the 1940 Act requiring registered open-end funds (including ETFs, but not including money market funds) to establish a liquidity risk management program, (2) amend Rule 22c-1 under the 1940 Act to permit, but not require, registered open-end funds (except for ETFs and money market funds) to use “swing pricing” and amend Rule 31a-2 to require funds to preserve certain records related to swing pricing, and (3) amend disclosure and reporting requirements on Form N-1A, proposed Form N-PORT and proposed Form N-CEN regarding swing pricing and liquidity risk management.