Feb. 13, 2023
February 13, 2023 The concept and rationale for a swing pricing mechanism for mutual fund pricing makes a lot of sense. Unfortunately, I am not convinced that potential benefits will come anywhere close to exceeding the costs of upending a well-established set of procedures for transmitting and accepting orders, and pricing mutual fund shares that have evolved and adapted over decades. The SEC seems to want to prevent fairly infrequent market upheavals from imposing costs on existing owners of mutual fund shares by instead estimating the potential costs and imposing them on investors purchasing or redeeming shares. This rationale makes some sense in isolation. But the implementation of the \"hard close\" requirement to make this work will impose a different set of costs on every market day of the year, by preventing intermediaries from assuring their customers that their orders will be accepted and transacted in a timely manner, which in many cases they won't be. I believe the certain costs in disruption and delay of order processing will far exceed any theoretical benefit to mutual fund investors.