On Sept. 22, 2015, swing pricing gained attention in U.S. markets when the Securities and Exchange Commission (SEC) proposed to permit its use as an anti-dilution mechanism for mutual funds.
Swing pricing adjusts a fund’s net asset value (NAV) to reflect costs associated with subscriptions and redemptions and passes those costs along to purchasing and redeeming shareholders, limiting the effect of trading activity on long-term fund investors.
The SEC proposal limits partial swing pricing to registered, open-end management investment companies and excludes money market funds, exchange-traded funds (ETFs), unit investment trusts (UITs) and closed-end funds.
In light of the proposal, NICSA and the Association of the Luxembourg Fund Industry (ALFI) recently hosted a “Swing Pricing 101” webinar and produced a corresponding white paper to provide educational insight, identify best practices and explain concerns within the industry.
These materials will help you learn how swing pricing works as outlined by a successful case study in Luxembourg, where the tool has been used for the past 15 to 20 years with positive results—and which the SEC’s proposal references.
Differences in daily fund flow data availability in Europe versus the U.S., and in particular the Luxembourg market, also are addressed.
To view the archived version of the Jan. 27, 2016, “Swing Pricing 101” webinar, visit www.nicsa.org/WebinarArchives, and be sure to share your thoughts on swing pricing with us.