EFAMA Swing Pricing Clarification
Another recent letter posted to the SEC under its "Comments on Money Market Fund Reform" page comes from Tanguy van de Werve, Director General, European Fund and Asset Management Association (EFAMA), Trade Association. Under the headline, "EFAMA Swing Pricing Clarification," he writes, "This letter is respectfully submitted by the European Fund and Asset Management Association ('EFAMA') in response to the rules regarding money market funds ('MMFs') proposed by the Securities and Exchange Commission (SEC) on 15 December 2021 and published in the Federal Register on 8 February 2022 and is intended to clarify for the SEC's record that money market funds in Europe do not, and have not, utilized swing pricing. On page 7269 [sic] of the Proposal, in referencing the operational opposition to the application of swing pricing to MMFs, the SEC notes that '[s]ome commenters asserted that swing pricing works better in Europe due to fundamental differences between fund operations in the U.S. and Europe (i.e., earlier trading cut-off times, greater use of currency-based orders versus share- or percentage based transactions, and more direct-sold funds).' It should be clarified that commenters referenced are not referring to EU MMFs. Additionally, on page 7303 [sic] of the Proposal, in the SEC's discussion on the use of swing pricing in other jurisdiction, footnote 355 refers to the operation of swing pricing in other jurisdiction but does not clarify which jurisdictions it is referring to. We are not commenting on any other jurisdiction that the SEC may be referring to, however would like to confirm again that in Europe, MMFs do not and have not utilized swing pricing. We recognize, however, that such liquidity management tool is available for non-MMF vehicles domiciled in Europe and has been used successfully, for instance, in high-yield fixed income funds. We appreciate this opportunity to clarify for the record that swing pricing has not been applied to EU MMFs, as it is important that global policy makers not make policy determinations based on incorrect or misleading data. For further details, please contact Federico Cupelli, Deputy Director for Regulatory Policy. I thank you for your consideration and remain at your disposal. Yours sincerely, Tanguy van de Werve, Director General."
