SEC Extends Compliance Date for Liquidity Rule Provisions, Issues Additional FAQs

The SEC announced that it extended the compliance date for certain provisions of the liquidity rule by six months. “The new compliance date will provide funds additional time to complete implementation of the final rule’s classification requirement, along with specified other elements that are tied to the classification requirement,” the SEC said in a press release.  The requirements for funds to adopt a liquidity risk management program and to limit illiquid investments to 15 percent of the fund’s portfolio, will go into effect as originally scheduled. The new compliance date for implementation of the classification and classification-related elements of the rule is June 1, 2019, for larger fund groups, and Dec. 1, 2019, for smaller fund groups.  The other requirements will go into effect as originally scheduled:  Dec. 1, 2018, for larger fund groups, and June 1, 2019, for smaller fund groups. The SEC also issued an additional set of FAQs related to the liquidity rule, focusing on questions related to the liquidity classification process, and stated that it anticipates considering future amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for mutual funds. Chairman Jay Clayton said in the release that he expects that the action will address certain industry concerns that have been raised since the rule’s adoption and that the delay will promote a smoother and more effective implementation process for the rule.