SEC liquidity rules may trigger forced sales, funds warn

Investors may be forced to sell illiquid assets in a crisis to avoid compliance breaches

Sale sign in window

Fund managers say the US Securities and Exchange Commission’s (SEC) new liquidity risk management rules are placing an undue burden on asset managers and could potentially exacerbate a market crisis.

The rules require US mutual funds to maintain a minimum amount of highly liquid assets (HLA), known as ‘bucket one’ investments, and set a cap on ‘bucket four’ investments in highly illiquid assets.

This aspect of the rule could turn funds into forced sellers when compliance thresholds are

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