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Liquidity Rules Proposed On Outflow Fears – FT

FloodThe five commissioners of the SEC voted unanimously to develop a new rule to bolster disclosure standards and ensure funds have a plan to manage “liquidity risk”. FULL ARTICLE 
Comments
  • Wolfman
    WolfmanSeptember 25, 2015"I hope whoever is subscribing to the Friday newsletter appreciates the value that it brings. Over the last few months, the focus articles have steadily built upon a theme. That theme is the overall transparency and liquidity of the bond market. We have seen articles related to the "electronification" of the bond market, seen startups once praised for their forward-thinking and enlightened solutions to corporate bond liquidity unceremonially close shop. We have heard f…"
  • Charlie
    CharlieSeptember 25, 2015"Good to see the SEC reacting to the noise about broken bond markets and illiquidity. It is not necessarily bad news for investors or mutual funds. One benefit would be investors remaining in the fund are no longer penalized by having to pick up any losses caused by leaving investors being paid the NAV. Another benefit could be managers can reduce the liquidity buffer and so track their target index more closely meaning larger returns for investors (hopefully positive)…"
  • Merlin
    MerlinSeptember 24, 2015"It seems to me that it would be a good thing for more disclosure around a particular funds liquidity and would be considered an improvement over today's requirements. Investors could then take this expected/hoped for improved disclosure and incorporate it as another input into their investment decisions. Unclear whether this disclosure could somehow include a numerical measure of the funds liquidity but think that would be nice for retail investors if possible. My gue…"

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3 Comments on "Liquidity Rules Proposed On Outflow Fears – FT"

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Merlin
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It seems to me that it would be a good thing for more disclosure around a particular funds liquidity and would be considered an improvement over today’s requirements. Investors could then take this expected/hoped for improved disclosure and incorporate it as another input into their investment decisions. Unclear whether this disclosure could somehow include a numerical measure of the funds liquidity but think that would be nice for retail investors if possible. My guess is Blackrock and others wouldn’t mind this either as gives them a fallback if there is an issue with a fund that has a low liquidity… Read more »
Charlie
Guest
Good to see the SEC reacting to the noise about broken bond markets and illiquidity. It is not necessarily bad news for investors or mutual funds. One benefit would be investors remaining in the fund are no longer penalized by having to pick up any losses caused by leaving investors being paid the NAV. Another benefit could be managers can reduce the liquidity buffer and so track their target index more closely meaning larger returns for investors (hopefully positive). However, the devil is in the details. How will an exiting investor be sure that he gets good execution? What is… Read more »
Wolfman
Guest
I hope whoever is subscribing to the Friday newsletter appreciates the value that it brings. Over the last few months, the focus articles have steadily built upon a theme. That theme is the overall transparency and liquidity of the bond market. We have seen articles related to the “electronification” of the bond market, seen startups once praised for their forward-thinking and enlightened solutions to corporate bond liquidity unceremonially close shop. We have heard from the 10,000 hours team and were able to get some uninhibited insights into the bond market. This is a unique venue and one that continually adds… Read more »
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