Unique rule 22e-4 compliance solutions
Liquidity Risk Profile (LRP)
There are cases when open-ended mutual funds and ETF complexes with more than $1 billion of assets under management are required to be in compliance with some key implementation requirements of the SEC Rule 22e-4 ‘Liquidity Rule’. Depending upon the size of your fund complex, some elements of the regulations have been in effect as of June 1, 2018, while other requirements, such as additional liquidity rule mandates and elements in the ‘Modernization Rules,’ may have other compliance deadlines. Learn More >
SEC Rule Overview
As a manager, you should base your assessments on the assumption an asset can be converted to cash without significantly changing the market value of the investment.
General implementation mandates of the ‘Liquidity Rule’:
- Implementation of a liquidity program
- Assessment, management and periodic review of liquidity risk
- 15% limit on illiquid investments
- Liquidity related board and SEC reporting requirements (w/ some exclusions)
- Board designation of a program administrator
- Redemption in-kind policies and procedures
* Please consult your own legal counsel for details and direction.
Investment Liquidity Categories
HIGHLY LIQUID
Any investment that a fund reasonably expects can be convertible into cash in current market conditions in three business days or less.
MODERATELY LIQUID
Any investment that a fund reasonably expects can be convertible into cash in current market conditions in more than three calendar days but in seven calendar days or less.
LESS LIQUID
Any investment that a fund reasonably expects can be sold or disposed of in current market conditions in seven calendar days or less … but where the sale or disposition is reasonably expected to settle in more than seven calendar days.
HIGHLY ILLIQUID
Any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less.
Our Compliance Services
We are prepared to assist you with Rule 22e-4 reporting requirements in the following ways:
- Custom design a daily load-in process to input your equity portfolio holdings
- Use our Trade Compass tool to estimate your daily equity position liquidity
- Fixed income holdings can be custom processed on a periodic basis
- Automatically calculate the percentage of your overall portfolio in each liquidity category so you can construct a framework for exception identification and archiving
- Use our compliance dashboard to create an Overview Report with daily email alerts if a fund reaches a Highly Illiquid threshold level
Help you process the monthly N-PORT file upload to the EDGAR system
