SEC: Amendments to Rules Governing Pricing of Mutual Fund Shares

ABA Contact: Sally Miller 202-663-5325
Published: 68 Federal Register 70388 December 17, 2003
Comments Due: February 6, 2004
Disposition: Filed

The SEC Proposal seeks to amend Rule 22c-1 under the Investment Company Act. The Rule requires forward pricing of redeemable securities issued by registered investment companies. The proposed amendments to the Rule would provide that an order to purchase or redeem fund shares would receive the current day's price only if the fund, its designated transfer agent, or a registered securities clearing agency, i.e., the National Securities Clearing Corporation ("NSCC"), receives the order by the time that the fund establishes for calculating its net asset value (hereinafter referred to as a "4 p.m. hard close"). The amendments are designed to prevent unlawful late trading in fund shares.

ABA continues to strongly oppose a mandatory 4 p.m. hard close. A 4 p.m. hard close to the mutual fund or its agents disadvantages investors by denying them the choice of distribution channels and limiting their investment options. In addition, by encouraging investors to deal directly with mutual funds or their agents, a 4 p.m. hard close may deny them investment diversification.

ABA believes that there are potential technological solutions, that if put in place with appropriate controls, would offer a tamper-proof system for preventing late trading. 


2004 Regulations Chart
Federal Register
Comment Letter
Joint Comment Letter