NU Online News Service, Feb. 12, 2004, 1:38 p.m. EST, Washington – The American Council of Life Insurers, Washington, is opposing proposed mutual fund pricing rules.[@@]
The U.S. Securities and Exchange Commission came up with the rules in an effort to prevent illegal late trading, but the ACLI says the rules might create competitive imbalances between mutual funds and variable annuities offered in the pension market.
In a letter to the SEC, Carl Wilkerson, an ACLI chief counsel, says the SEC proposal will inevitably lead to unfair disparities in the market because it imposes different transactional deadlines on competing financial products.
Moreover, Wilkerson says, the ACLI worries that pension plan participants might be harmed under the proposal because they would be unable to formulate purchase, redemption and reallocation decisions based on the full day’s market developments.
Under the proposal, orders to purchase or redeem investment company shares would get the current day’s price only if the order were received by certain intermediaries, such as the investment company, by a specified deadline, which is generally 4 p.m. Eastern time.
This is called a “hard” 4 p.m. close.