A proposed rule from the Securities and Exchange Commission would “hinder savers’ access to a secure retirement,” according to a joint letter to SEC Chairman Gary Gensler from Sen. Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions Committee, and Rep. Virginia Foxx (R-NC), chairwoman of the House Education and the Workforce Committee.
Although the “Open-End Fund Liquidity Risk Management Programs and Swing Pricing; Form N-Port Reporting” rule, proposed late last year, is “designed to improve liquidity risk management programs to better prepare funds for stressed conditions and improve transparency in liquidity classifications,” according to the SEC, Cassidy and Foxx wrote that they are “concerned that the harm the [proposed rule] would cause to the retirement savings of American workers far outweighs any benefits.”
The proposed rule would deny same-day pricing for mutual fund trade orders that are not received by the mutual fund, its transfer agent or a registered clearing agency by an established cut-off time, which typically would be at 4 p.m. Eastern time.
The legislators said that this time stamp would place a burden on retirement plan investors with investments in mutual funds “by forcing a lag of up to a day on retirement plan investor mutual fund purchases and sales.” It also would “give investors who trade directly with a fund’s transfer agent a significant advantage over retirement plan participants by allowing same day pricing to all but retirement plan participants,” they said.
The proposal is “unworkable,” the legislators said.
According to Cassidy and Foxx, the proposal runs counter to the SECURE Act of 2019 and the Securing a Strong Retirement Act of 2022, both of which they maintain make it easier for Americans to save for retirement.
The SEC plans to issue a final rule in October, according to its regulatory agenda.
Foxx and Cassidy encouraged the agency “to reverse course and eliminate a hard close from any future rulemakings.”
