News & Events

Corporate Partner Rajib Chanda was quoted in Ignites, a Financial Times news service, regarding new SEC rules for fund firms that will require significant operational changes at the firms. The SEC is currently overhauling fund regulation, and has recently voted in three new rules – one to require funds to adopt liquidity risk management programs, and the other two to modernize fund reporting and allow funds to use swing pricing. The rule requiring adoption of liquidity risk management programs has gone through significant modification since its first proposal in September 2015. The final version dropped the six “bucket” classification system based on how quickly individual securities could be sold, which firms argued would be unworkable. Instead, the SEC reduced the buckets to four - highly liquid, moderately liquid, less liquid and illiquid - and allowed classifications to be made by asset class. Rajib observed that, “[T]he final rule seems to recognize that there are inherent limitations on classifying liquidity with a great deal of specificity and certainty,” and noted that implementing the new liquidity risk management programs is “still a heavy lift for compliance departments and portfolio teams.”