June brings the deadline for US asset managers to comply with SEC rules first proposed in 2017 – and amended in 2018 – to implement and disclose their liquidity risk-management programmes.
The aim is to reduce the danger that customers of mutual funds, who may have assumed they could cash out their investments in all circumstances, find their money trapped behind redemption gates if funds are unable to dispose of positions in a market panic.
The rule requires every fund to classify each individual portfolio investment into one of four liquidity buckets: highly liquid, moderately liquid, less liquid and illiquid investments.
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