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

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

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