SEC Proposes to Amend Liquidity Risk Management Disclosures for Funds
SEC proposed amendments to the forms designed to improve the reporting and disclosure of liquidity information by registered open-end investment companies. Under the proposal, funds must disclose information about the operation and effectiveness of their liquidity risk management program in their annual reports to shareholders. Comments should be received on or before 60 days after publication of the proposed rule in Federal Register.
SEC proposed to rescind the current requirement in Form N-PORT that funds publicly disclose aggregate liquidity classification information about their portfolios, in light of concerns about the usefulness of that information for investors. SEC also proposed amendments to Form N-PORT that would allow funds classifying the liquidity of their investments pursuant to their liquidity risk management programs required by rule 22e-4 under the Investment Company Act of 1940 to report on Form N-PORT multiple liquidity classification categories for a single position under specified circumstances. Finally, SEC proposed to add to Form N-PORT a new requirement that funds and other registrants report their holdings of cash and cash equivalents.
To promote effective liquidity risk management programs in the funds industry, SEC had also adopted the open-end fund liquidity rule in October 2016. Since adoption, staff has engaged in extensive outreach to identify potential issues associated with the effective implementation of the rule. This outreach resulted in a series of actions taken by SEC. Additionally, SEC had earlier adopted a rule that extended by six months the compliance date for the classification and classification-related elements of Rule 22e-4 and related reporting requirements. In conjunction with this extension, the staff issued new guidance intended to assist funds in complying with the classification requirements of the liquidity rule. These actions, along with the proposed rule on liquidity risk disclosures, intend to provide investors with accessible and useful information about liquidity risk management of the funds they hold, while providing sufficient time for funds to implement the requirement to classify their holdings efficiently and effectively.
Related Links
Keywords: Americas, US, Securities, Disclosure Requirements, Liquidity Risk, Reporting, SEC
Featured Experts
David Fihrer
Skilled life insurance actuary; subject matter expert on IFRS 17 and source of earnings
Salman Siddiqui
ESG and climate expert for P&C insurance; IFRS 17 specialist and chartered accountant; extensive experience in both life and non-life insurance, with focus on capital management, financial performance, and financial reporting.
Previous Article
EP Publishes a Working Document on Proposed Amendments to ESFSRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
