Bank-loan funds in the dark over liquidity rules

Haziness in SEC requirement on ‘highly liquid’ assets could leave funds open to litigation

Managers are fearful of setting the threshold for liquid assets too low

US bank-loan funds are struggling to comply with new rules from regulators that require them to hold a buffer of highly liquid assets in their portfolio, but leave it unclear where that buffer should be set.

Managers fear they could face litigation from end-investors if they set the liquidity threshold too low and subsequently are unable to meet redemptions in a crisis.

“[This] leaves us vulnerable to having a different interpretation [of the rule]. And with a negative outcome, that could lead

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