Statement on Fixed Income Trading and Investment Company Act Rule 17a-7

I commend the Division of Investment Management for seeking comment on Rule 17a-7 under the Investment Company Act of 1940 and the trading of fixed income securities.[1]

In December 2020, I supported the Commission adopting the new Investment Company Act Rule 2a-5, to provide clearer rules for investment company boards of directors with respect to their obligations to value portfolio securities.[2] During the comment process for that rulemaking, however, we heard that Rule 2a-5 and its definition of “readily available market quotation” would likely affect the ability of funds to trade fixed income securities with their affiliates. These were important concerns and remain so today.

I am grateful that the staff is moving forward in reviewing Rule 17a-7 and prioritizing questions related to fixed income in particular. This past year, we have all seen that our fixed income markets are critical to the functioning of our other securities markets and our economy more broadly. I look forward to hearing insights from commenters about how we can facilitate fixed income trading in ways that benefit investors and our markets.