SEC Modifies Certain Liquidity Rule Compliance Dates and Issues New FAQs and Interim Rule
The SEC extended by 6-months certain requirements of Rule 22e-4 (the Liquidity Risk Management Program Rule ("LRMP"), Form N-PORT and Form N-LIQUID.
You can read the interim final rule here: https://www.sec.gov/rules/interim/2018/ic-33010.pdf
The Securities and Exchange Commission is adopting an interim final rule that revises the compliance date for the requirements of Rule 22e-4 for classification, highly liquid investment minimum ("HLIM"), and board approval, as well as related reporting requirements of Part D on Form N-LIQUID and liquidity disclosures on Form N-PORT under the Investment Company Act of 1940. The revised compliance date will be June 1, 2019, for larger entities (revised from December 1, 2018) and December 1, 2019, for smaller entities (revised from June 1, 2019).
The Commission is not extending the compliance date for the other provisions of Rule 22e-4 and Form N-LIQUID, and liquidity-related changes to Form N-CEN — which remain December 1, 2018 for larger entities and June 1, 2019 for smaller entities. Finally, the Commission is providing guidance to assist funds that will not be engaging in full portfolio classification before the revised compliance date, and In-Kind ETFs, which are not required to engage in full portfolio classification, in identifying illiquid investments for purposes of complying with the 15% illiquid investment limit.
Six-month extension of the compliance date for the portfolio classification buckets and certain related requirements that are dependent on the classification requirement
Extend the compliance date for the HLIM requirement
Extend the compliance date for the portfolio classification and HLIM reporting requirements of Forms N-PORT and N-LIQUID
Six-month extension of the compliance date for the recordkeeping requirements related to the elements of Rule 22e-4 but not the recordkeeping requirement related to the liquidity risk management program itself
Six-month extension of the compliance date for board approval of the liquidity risk management program save for the classification buckets and HLIM requirements) and and the related annual review requirements
Other parts of the LRMP, including the requirement to limit illiquid investments to 15% of the fund's portfolio or the fund board designation of the LRMP administrator, will remain on schedule with a compliance date of December 1, 2018 for larger fund groups and June 1, 2019 for smaller fund groups
In addition, the SEC is seeking comment on the delay in the classification, HLIM, and related reporting and recordkeeping requirements, the six-month extension, board oversight requirements as well as potential economic effects of the delay and the Rule.
We encourage the industry to respond with their comments to the SEC inquiries.
Comment Date: Comments should be received on or before April 27, 2018.
Use the Commission’s Internet comment form (http://www.sec.gov/rules/interim-final-temp.shtml) or
Send an e-mail to email@example.com.
Please include File Number S7-03-18 on the subject line.
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