"The proposal is intended to provide additional safeguards to prepare for stressed market conditions — for example, in an economic shock. However, we are concerned that the harm the proposal would cause to the retirement savings of American workers far outweighs any benefits," wrote Mr. Cassidy and Ms. Foxx, who serve as ranking member of the Senate Health, Education, Labor and Pensions Committee and chairwoman of the House Education and the Workforce Committee, respectively.
Specifically, the lawmakers take issue with the proposal's "hard close" feature. In order to implement swing pricing, the SEC proposed a hard close for investors, typically around 4 p.m. ET, which they said would help funds receive up-to-date flow information, prevent late trading and improve processing for orders.
"As a result (of the hard close), investors who trade directly with a fund's transfer agent will have a significant advantage over retirement plan participants, whose trades are typically placed through recordkeepers," the lawmakers wrote.
In a host of comment letters submitted earlier this year, many trade associations made similar arguments. Reps. Ann Wagner, R-Mo., and Brad Sherman, D-Calif., leaders of the House Financial Services Committee's Capital Markets Subcommittee, also wrote a letter to the SEC in March voicing similar concerns.
Mr. Cassidy and Ms. Foxx in their Wednesday letter urged the SEC "to reverse course and eliminate a hard close from any future rulemakings." They write that the hard close could "hinder (the) progress" that Congress made with the SECURE Act of 2019 and SECURE 2.0 — two legislative packages aimed at bolstering retirement security for Americans.
In late May, Mr. Gensler defended the swing pricing proposal at the Investment Company Institute Leadership Summit. He told ICI President and CEO Eric J. Pan that the proposal was developed in response to concerns about dilution, adding, "Dilution and liquidity are key to investor protection."