Wall Street Firms Fight SEC Push to Change Mutual-Fund Pricing
February 23, 2023 | Emily Graffeo | Bloomberg
BlackRock Inc., Charles Schwab Corp., Fidelity Investments and Morgan Stanley are among those pushing back against a sweeping set of regulatory changes that would include the introduction of a “swing pricing” mechanism for the funds’ shares. That price-adjustment process is intended to protect investors who remain in a fund from bearing the costs when others enter or exit.
That’s theoretically a good thing for long-term investors by protecting them from the impact of liquidity crises like the one that broke out in March 2020, when funds were forced to dump assets at fire-sale prices as fearful holders pulled out cash in droves. But representatives of the securities industry say it would impose unnecessary new burdens, reduce transparency to investors, increase costs and ultimately do little to protect long-term shareholders.
“The result is likely to be a significant decline in mutual fund usage by individual investors, reducing choice, increasing complexity and ultimately driving investors to other investment options,” Rick Wurster, the president of Charles Schwab, wrote in a Feb. 14 letter to the SEC. “We believe it is not hyperbole to say that this proposal will completely reshape the fund landscape, harming tens of millions of investors.”
