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(Reuters) -Wall Street's top regulator plans to redraft a proposal for "swing pricing" regulations on how so-called open-end investment funds should manage liquidity, which had faced industry objections, according to a regulatory agenda on Monday.
The U.S. Securities and Exchange Commission in 2022 issued the proposal which it said would help such funds, in which investors can redeem their shares on a daily basis, better prepare for market stresses like those at the start of the coronavirus pandemic.
According to a regulatory agenda released Monday, rather than moving ahead with a vote to finalize the rule proposal, SEC staff now expect to recommend that the agency's five-member commission issue a new one.
The Investment Company Institute, which objected to the proposal, welcomed the move, saying in a statement that the proposal was unworkable and would have jeopardized millions of Americans' investments.
The SEC proposal would have set new standards for analyzing how readily fund investments can be sold for cash and limited how much a fund could invest in securities that take more than seven days to settle after a trade.
The proposal would also have required open-end funds to apply "swing pricing" to shift the costs of hasty redemptions to investors who sell rather than hitting those who remain.
Last year, the SEC scrapped plans to require similar swing pricing in money market funds, marking an important victory for asset managers such as BlackRock, Vanguard and Fidelity.
An agency spokesperson did not directly respond to detailed questions on Monday but referred a reporter to a speech SEC Chair Gary Gensler had made in May.
Gensler said at the time he had asked SEC staff to consult with banking regulators on how best to mitigate "gaps" between the regulations governing open-end funds and those for so-called collective investment funds. He said the latter held an estimated $7 trillion but lacked SEC oversight and certain key investor protections.
(Reporting by Douglas Gillison; Editing by Cynthia Osterman)
