WASHINGTON — A coalition of retirement plan service providers and plan sponsors wants the SEC to adopt the group's proposed alternative to the regulator's "hard 4 p.m. close," which is intended to combat late-trading abuses.
And Charles Schwab & Co. officials are considering joining forces with the coalition.
The detailed, 34-page proposal was crafted by the SPARK Institute, the legislative arm of the Society of Professional Administrators and Recordkeepers, Simsbury, Conn. It was formally submitted to SEC commissioners and senior staff in the investment management division on July 30.
Critics say the Securities and Exchange Commission's rule, proposed last December, treats plan participants as "second-class citizens." That's because the proposed rule requires all orders to reach mutual fund companies or their transfer agents by 4 p.m. Eastern time to get that day's closing price. Because plan participants typically must submit their orders to record keepers or other plan providers — which then collect and process all of the orders before sending them to the mutual fund companies — participants could have a trading deadline several hours earlier than other investors.
The SPARK proposal, on the other hand, permits participants to place orders up to 4 p.m. Service providers would use a tamper-proof electronic time stamp on each order, enabling them to continue to process and submit them after the markets close.
"This has a very good chance of being supported by virtually the entire retirement plan community," said Brian H. Graff, executive director of Arlington, Va.-based ASPA, formerly the American Society of Pension Actuaries, which supports the proposal.