"Over the past two decades, we've heard concerns about and seen gaps in Rule 10b5-1 — gaps that today's proposals would help fill," SEC Chairman Gary Gensler said in a statement.
Amy Borrus, executive director at the Council of Institutional Investors, welcomed the SEC's move in statement. "At a time when many Americans believe the stock market is rigged, cleaning up practices that can be a pathway for abusive trades will help restore trust in our markets," she said.
The commission also approved proposing amendments that would increase liquidity requirements for money market funds in an effort to provide a more substantial liquidity buffer in the event of rapid redemptions.
SEC staff noted that in March 2020, the early days of the COVID-19 pandemic, many investors reallocated their assets into cash and short-term government securities. Prime and tax-exempt money market funds, particularly institutional funds, experienced large outflows, which contributed to stress on short-term funding markets, the SEC said.
The amendments would remove provisions in the current rule permitting or requiring a money market fund to impose liquidity fees or to suspend redemptions through a gate when a fund's liquidity drops below an identified threshold. It would also require institutional prime and institutional tax-exempt money market funds to implement swing pricing policies and procedures that would require redeeming investors, under certain circumstances, to bear the liquidity costs of their redemptions.
The commission's two Republican members — Hester M. Peirce and Elad L. Roisman — voted against proposing the amendments, which will have a 60-day comment period upon publication in the Federal Register.
Jane Heinrichs, associate general counsel at the Investment Company Institute, said in a statement that her organization is concerned about the proposed complex mandatory swing pricing regime for certain money market funds. "Requiring swing pricing will impose excessive costs and strip funds of many essential characteristics that make them attractive to investors seeking cash management investment products," she said.
On the issue of stock buybacks, the commission in a 3-2 vote with Ms. Peirce and Mr. Roisman dissenting, approved a proposal to require an issuer to provide more timely disclosure on purchases of its equity securities for each day that it, or an affiliated purchaser, makes a share repurchase. A new form — Form SR — would have to be submitted the first business day following the day on which the issuer executes a share repurchase. The proposal will have 45-day comment period upon publication in the Federal Register.
Lastly, the commission in another 3-2 vote with Ms. Peirce and Mr. Roisman dissenting, approved a proposal aimed at preventing fraud, manipulation and deception in connection with security-based swap transactions. The proposal also includes a requirement for any person or group, with a security-based swap position that exceeds a certain threshold to promptly file a Schedule 10B disclosing information related to its position. The proposal will have 45-day comment period upon publication in the Federal Register.
