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November 6, 2017 TO: ICI MembersInvestment Company Directors SUBJECTS: Compliance
Disclosure
Exchange-Traded Funds (ETFs)
Fund Accounting & Financial Reporting
Fund Governance
Investment Advisers
Operations
Portfolio Oversight
Risk Oversight
Transfer Agency RE: ICI Submits Letter to SEC Requesting Liquidity Rule Compliance Delay
ICI submitted a letter to the SEC on Friday,[1] requesting that the SEC adjust the compliance schedule for the liquidity rule’s asset classification and related requirements as soon as possible, for the amount of time the SEC needs to ease compliance with those requirements. At a minimum, we asked that the SEC delay these requirements by at least one year, even if the SEC determines not to amend the rule.[2]
ICI submitted a letter to SEC Chairman Clayton in July, asking that the SEC delay the compliance schedule for the liquidity rule’s asset classification and related requirements as soon as possible, providing the SEC with time to propose and finalize targeted rule amendments.[3] Our most recent letter supplements the July letter, by providing information and data that support delay.
Among other things, the letter provides detailed information from a September 2017 ICI member survey about (i) members’ ability to comply with the rule by the current compliance dates, and (ii) the one-time and ongoing costs they expect to incur to comply with the rule’s bucketing and reporting requirements. The letter summarizes respondents’ views on vendor readiness; explains why “vendor readiness” and “fund readiness” are not one and the same; details the time and work involved for fund complexes to select and onboard vendors once vendors’ products are sufficiently mature; and outlines all additional “bucketing-contingent” implementation work that remains for funds after they complete these prior steps.
Dorothy M. Donohue
Acting General Counsel
Matthew Thornton
Assistant General Counsel
endnotes
[1] Available at: https://www.ici.org/pdf/17_ici_sec_liquidity_ltr_supp.pdf.
[2] Presently, most funds must comply with the liquidity rule and related reporting requirements by December 1, 2018. The compliance date for fund complexes with less than $1 billion in net assets is June 1, 2019.
[3] Available at: https://www.ici.org/pdf/liquidity_sec_clayton_ltr.pdf.