ACA Compliance recently conducted a survey of mutual fund/ETF complexes and investment advisers/sub-advisers to assess their readiness and preparations for the SEC’s liquidity risk management rule. ACA says it received anonymous responses from 77 entities, with an almost even split between fund complexes and advisers. Of the 32 participating fund complexes, 94% identified themselves as larger fund groups. Of the participating advisers, 42% indicated that they manage between one and five funds, 27% manage between five and ten funds, and 31% manage more than ten funds.Some findings from the survey:
- Twenty-three of the 32 fund complexes (72%) indicated that the investment adviser, through a committee structure, will be designated as the program administrator. None of the fund complexes are delegating program administrator responsibility to a single individual at the adviser or to sub-advisers.
- Half (16) of the 32 fund complexes indicated that the fund board intends to be aware of the funds’ partial liquidity program, which must be in place by this December, but not approve the full program until prior to June 2019.
- Thirty-eight of the 45 advisers (84%) reported that they have been tasked with classifying the liquidity of portfolio investments. Of these, only 18 (18%) intend to build an in-house technology solution.
- 44% of respondents have not decided on a course of action regarding the highly liquid investment minimum, or HLIM, given, in part, the delay in the deadline for establishing an HLIM until June 1, 2019, for larger fund groups.