Funds take action to avoid fire sales under new SEC liquidity rule

Asset managers want more time to get illiquid assets within regulatory limits during market upheaval

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Funds are being encouraged to put policies in place to avoid forced sales

Mutual fund managers are drawing up policies to avoid fire sales if a soon-to-be-enforced regulatory cap on illiquid assets is breached.

From December 1, the US Securities and Exchange Commission’s liquidity risk management rule will impose a 15% limit on illiquid investments in mutual fund portfolios. Fund managers, however, fear that in the event of a market cave-in, their ratio of illiquid assets could suddenly shoot higher, forcing them to jettison difficult-to-sell securities into a sinkin

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