Proposed Mutual Fund Pricing Rules Will Disadvantage VAs: ACLI
Proposed mutual fund pricing rules aimed at enhancing protections against illegal late trading may create competitive imbalances between mutual funds and variable annuities offered in the pension market, says the American Council of Life Insurers.
In a letter to the Securities and Exchange Commission, Carl B. Wilkerson, vice president and chief counsel for securities and litigation with ACLI, says that because the SEC proposal imposes different transactional deadlines on competing financial products, it will inevitably lead to unfair disparities in the market.
Moreover, Wilkerson says, ACLI is concerned that pension plan participants may be harmed under the proposal because they would be unable to formulate purchase, redemption and reallocation decisions based on the full days market developments.
Under the proposal, orders to purchase or redeem investment company shares would obtain the current days price only if the order is received by certain intermediaries, such as the investment company, by a specified deadline, which is generally 4 p.m. Eastern time.
This is called the “hard” 4 p.m. close.