On Apr. 22, 2025, SEC published the final rule and guidance in the federal register.
Form N-CEN effective date is Nov. 17, 2025; and for Form N-PORT, the effective and compliance dates fall on Nov. 17, 2027, with an exception to May 18, 2028.
SEC proposed rule and form amendments for open-end management investment companies re stressed conditions and to mitigate dilution of shareholders’ interests.
Revisions enhance how funds manage liquidity risks, require more detailed reporting.
Incorporate lessons learned from market disruptions during the COVID-19 pandemic.
Without effective liquidity risk management, funds may not be able to make timely payment on redemptions, and sales of portfolio investments to pay redemptions.
Concerns heightened in times of stress or for funds invested in less liquid investments.
Open-end funds have structural liquidity mismatch which can raise issues for investor protection; at onset of pandemic, investors sought to redeem investments from funds.
The proposed amendments address these investor protection, resiliency challenges.
Liquidity Risk Management
Proposal requires most open-end funds to incorporate stress in liquidity classifications.
By assuming the sale of a stressed trade size, similar to an ongoing stress test.
Set other minimum standards for classifications, to prevent overestimation of liquidity.
Amend liquidity categories, including by removing the less liquid investment category.
Funds would be required to maintain minimum amount of highly liquid assets of at least 10 percent of net assets to prepare for and help manage stressed conditions.
Provide investors with aggregate data re fund liquidity profile, use of service providers.
Swing Pricing and Hard Close
Proposal would require open-end funds other than Money market funds (MMF) and most Exchange traded funds (ETF) to adjust Net asset value (NAV), use swing pricing.
So that transaction price effectively passes on costs stemming from inflows or outflows to the investors engaged in that activity, rather than diluting other fund shareholders.
Funds to adopt policies and procedures to adjust NAV per share by a swing factor.
When fund experiences net redemptions or when net purchases exceed a threshold.
Swing factor would reflect bid-ask spread, other costs of selling/buying a vertical slice.
Proposal would require hard close for these funds, help operationalize swing pricing.
Would also require additional disclosure related to swing pricing and the hard close.
More Frequent Fund Reporting
Funds would be required to file portfolio and other information on Form N-PORT on a monthly basis within 30 days, with the report becoming public after 30 additional days.
Apply to all registrants that report on Form N-PORT, including open-end funds other than MMFs, registered closed-end funds, and ETFs organized as unit investment trusts.
Reporting changes would triple amount of information currently available to investors.
Chair, Commissioner Supporting Statements
SEC chair Gensler said proposal to promote investor protection, greater fund resiliency.
A goal of the proposal is to ensure that redeeming shareholders, rather than remaining shareholders, bear the cost of fund redemptions, particularly during stress times.
Gensler particularly interested in public comment on hard close aspect of the proposal.
Lizárraga said, market instability, stressed conditions at onset of pandemic tested liquidity risk management programs, revealed weaknesses that warrant attention.
Hopeful for feedback from all stakeholders on whether proposed reforms will strengthen funds’ resiliency and liquidity risk management during stressed conditions.
Crenshaw posed questions to commenters re unintended consequences for mutual fund market, operational challenges, swing pricing, hard close, potential alternatives.
Commissioner Opposing Statements
Peirce said, nobody has bandwidth to consider proposal that would fundamentally alter way open-end funds operate, how investors interact with them, and infrastructure.
Hard close, cascading consequences for intermediaries, administrators and investors.
Solution that SEC proposed may cost fund investors more than the dilution does.
Asked commenters to help with different options for addressing dilution concerns.
Also risks upending mutual funds’ longstanding, equitable share pricing methodology.
Consultation
Comment period will remain open for 60 days after publication in the federal register.
Dec. 2022 Fed Reg SEC Proposal
On Dec. 16, 2022, SEC issued proposal in federal register, comments Feb. 14, 2023.
Feb. 2023 IDC Comment on Proposal
On Feb. 14, 2023, IDC managing director issued comment letter on proposed rules.
Expressed concern for negative consequences of mandatory swing pricing, liquidity.
Proposal would treat many shareholders who invest in mutual funds through 401(k) plans as ‘second class’ by significantly limiting their ability to obtain same-day pricing.
Would cause confusion and ignore the facts and circumstances of particular funds.
Could result in widespread displacement of mutual funds by other investment products that may be less regulated and do not offer same degree of robust investor protection.
Effect would be to drive investors away from a shareholder-centric investment product that is subject to stringent regulation, disclosure requirements, and board oversight.
Apr. 2023 ICI CEO FT Op-Ed
On Apr. 13, 2023, ICI CEO Eric Panprovided opinion piece in the Financial Times.
Argued the 4pm ET hard close and swing pricing proposal adversely impacts markets.
Limits the investor's full access to a given day's pricing during normal market hours.
Therein discriminates trading by time-zone and imposes earlier cut-off order times.
Called the proposal unworkable and bad news for US's 100mn mutual fund investors.
Op-ed published Apr. 13, 2023, received Apr. 19 and summarized on Apr. 24, 2023.
In Nov. 2023, SIFMA issued comment letter on SEC proposal, comments, #193408.
In Jul. 2024, ICI response on SEC intent to re-propose swing pricing rule, #218876.
Aug. 2024 SEC Final Rule
On Aug. 28, 2024, SEC issued final rule, fact sheet on Form N-PORT and Form N-CEN reporting; as well as guidance on open-end fund liquidity risk management programs.
Adopted substantially as proposed, however, unlike the proposal, SEC did not remove requirements that a filer report certain information regarding its use of swing pricing.
Lizarraga said reforms fall short, but supported as improvement over current rule.
Amendments effective on Nov. 17, 2025; fund groups with net assets of less than $1bn will have until May 18, 2026, to comply with the Form N-PORT amendments.
In Aug. 2024, ICI issued statement with concerns on N-PORT adoption, see #224346.
Sep. 2024 SEC Fed Reg Final Rule
On Sep. 11, 2024, SEC published the final rule and guidance in the federal register.
Amendments to N-PORT and N-CEN, amendatory instruction 2 to 17 CFR 270.30b1-9, effective Nov. 17, 2025; amendatory instruction 3 to 17 CFR 270.30b1-9 May 18, 2026
Apr. 16, 2025 SEC N-PORT Effective Date Extension
On Apr. 16, 2025, SEC extended the effective date for the amendments to Form N-PORT that were adopted on Aug. 28, 2024, from Nov. 17, 2025, to Nov. 17, 2027.
Extending compliance dates for these amendments related to Form N-PORT reporting.
The effective, compliance date amendments to Form N-CEN remains Nov. 17, 2025.
Apr. 22, 2025 SEC Fed Reg Final Rule
On Apr. 22, 2025, SEC published the final rule and guidance in the federal register.
Form N-CEN effective date is Nov. 17, 2025; and for Form N-PORT, the effective and compliance dates fall on Nov. 17, 2027, with an exception to May 18, 2028.
