SEC Mulls Options to Its Late Trade Rule

WASHINGTON -- The Securities and Exchange Commission said on Wednesday it was considering alternatives to its plan to bar mutual funds from accepting orders after the market close for trades at that day's price, Reuters reported.

Paul Roye, director of the SEC's investment management division, told a Senate hearing that the commission had received over 800 comments on its proposed hard 4 p.m. rule aimed at ending illegal late trading in mutual funds.

Critics of the proposal argue it would require brokers or other intermediaries to set cut-offs for orders well before the 4 p.m. Eastern Time close and would limit opportunities for investors to place orders for fund transactions.

“While we believe the proposed rule amendment would virtually eliminate the potential for late trading through intermediaries that sell fund shares, it is clear from the comments that some believe that the 'hard four' rule is not the preferred approach,'' Roye told the Senate Banking Committee.

“Consequently, we are studying other approaches to addressing this issue,'' said Roye, without providing details of the alternatives under consideration. “We do not want to adversely impact fund investors if there are alternatives that effectively -- truly effectively -- address late trading abuses.''

-- NYSSCPA.org News Staff

Posted on 3/10/04