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Some Board Responsibilities Under Liquidity Rule Delayed

The SEC is extending the compliance date for provisions of the Liquidity Rule which require fund boards to initially approve the fund’s liquidity risk management program and to review certain reports on the operation of the program. The revised compliance date will be June 1, 2019, for larger entities (revised from December 1, 2018) and December 1, 2019, for smaller entities (revised from June 1, 2019). The SEC is also delaying the recordkeeping requirements of the rule related to the materials provided to the fund’s board.  According to the SEC’s interim rule release: “Because the Commission is granting funds additional time to incorporate the delayed elements into their programs, we believe that it would be unnecessarily burdensome to require the board to review the fund’s program before funds incorporate all elements of the program. Similarly, we believe it is unnecessarily burdensome to require the board to conduct annual reviews of the program prior to the complete development of the fund’s program.” Boards currently remain responsible for designating the program administrator. The SEC is also not extending the compliance date for the 15% illiquid investment limit of the rule, or the related board and SEC reporting requirements. The SEC is seeking comment on the delay of the board oversight requirements.