ALTERNATIVES TO SEC "HARD 4 PM CLOSE" PROPOSAL; CONFERENCE CALL SCHEDULED FOR AUGUST 30 AT 2:00 PM

[17915] August 25, 2004 TO: PENSION COMMITTEE No. 39-04 PENSION OPERATIONS ADVISORY COMMITTEE No. 57-04 OPERATIONS CHAIRMAN ADVISORY GROUP No. 1-04 RE: ALTERNATIVES TO SEC “HARD 4 PM CLOSE” PROPOSAL; CONFERENCE CALL SCHEDULED FOR AUGUST 30 AT 2:00 PM As you are aware, the SEC has proposed that all orders to purchase and redeem mutual fund shares be received by the fund, its designated transfer agent, or a registered securities clearing agency by the time the fund calculates its net asset value to receive that day’s price (a “hard 4:00 pm close”).1 In its support for a hard 4:00 pm close, the Institute has repeatedly stated that the list of entities that may receive orders on behalf of the fund by the 4:00 p.m. cutoff should be revisited if the SEC determines that technology exists to prevent late trading abuses.2 Attached for your review are drafts of two alternative proposals currently being considered by the SEC staff for expanding the list of entities eligible to receive orders by 4:00 pm Eastern time: (1) the “SPARK” proposal and (2) the “SMART 4” proposal. To discuss the details of these approaches, a conference call has been scheduled for Monday, August 30, at 2:00 p.m. Eastern time. If you would like to participate in this call, please complete the attached response form and fax it to Brenda Turner at (202) 326-5841 or e-mail at bturner@ici.org by noon, Monday, August 30. To participate in the call, please dial 888-426-8928 and enter passcode 37885. If you have any questions about the call, please contact the undersigned at 202-326-5837 or tkim@ici.org. Thomas T. Kim Associate Counsel Attachments (in .pdf format) 1 See Institute Memorandum (#16874) to Accounting/Treasurers Members No. 56-03, Operations Members No. 42-03, Pension Members No. 54-03, SEC Rules Members No. 182-03 and Small Funds Members No. 82-03, dated December 12, 2003. 2 See, e.g., Institute Memorandum (#17087) to Accounting/Treasurers Members No. 5-04, Bank and Trust Advisory Committee No. 2-04, Broker/Dealer Advisory Committee No. 5-04, Pension Members No. 12-04, Pension Operations Advisory Committee No. 13-04, Operations Members No. 9-04 and Transfer Agent Advisory Committee No. 18-04, dated February 9, 2004.