On September 22, 2015, the SEC proposed rules to enhance liquidity risk management by mutual funds and ETFs (U.S. Securities and Exchange Commission, 2015b).The proposal would require each of these funds to adopt a liquidity risk-management program, categorize the liquidity of every portfolio asset, set its own minimum share of “three-day liquid assets,” and disclose information about portfolio liquidity and the use of lines of credit and inter-fund lending.
The proposal also would allow mutual funds to use “swing pricing,” a process of adjusting the net asset value of a fund’s shares to pass on to purchasing or redeeming investors more of the costs associated with their trading activity.