The U.S. Securities and Exchange Commission (SEC or Commission) has unanimously adopted new rules and rule amendments to require registered open-end investment companies (including exchange traded funds and exchange-traded managed funds but excluding money market funds) to establish liquidity risk management programs. The SEC also adopted, by a 2-to-1 vote, rule amendments to permit – but not require – registered open-end investment companies (excluding money market funds and exchange-traded funds) to use “swing pricing.” In addition, the Commission has imposed new disclosure and reporting requirements related to a fund’s liquidity risk management program and swing pricing.

The new rules and rule amendments represent significant changes to current liquidity management and reporting requirements and will require significant changes to fund operations, as well as disclosure and reporting requirements. A summary of the new rules and rule amendments is provided below.