The US Securities and Exchange Commission (SEC), by a 3-2 vote, recently adopted amendments to registered fund reporting requirements on Form N-PORT and Form N-CEN and provided guidance on open-end funds’ liquidity risk management programs.

The amendments to Form N-PORT will increase both the frequency with which portfolio holdings information is filed and the public availability of such information. The amendments to Form N-CEN will require open-end funds to report information about service providers that support their liquidity risk management programs. The SEC also provided guidance regarding liquidity risk management program requirements in response to questions identified by the staff of the SEC (the Staff) through its outreach and monitoring activities.

The reporting amendments were adopted substantially as proposed in November 2022 (the Proposal), whereas the liquidity guidance was issued in lieu of certain amendments to Rule 22e-4 under the Investment Company Act of 1940 (the 1940 Act) that were included in the Proposal. [1] Notably, after strenuous objection from the fund industry, the SEC also did not adopt the elements of the Proposal related to swing pricing.

KEY TAKEAWAYS

As further elaborated on below, here is what you need to know about the amendments and SEC guidance:

• Although reportable information on Form N-PORT will not substantially change, reports will be filed monthly instead of quarterly, with all monthly data made public on a 60-day delay [2]
• Funds will be required to report information about liquidity service providers on Form N-CEN
• Larger fund complexes will be required to comply with the new reporting requirements as of November 17, 2025, but funds that belong to fund families with less than $1 billion in net assets will have until May 18, 2026 to comply with the new Form N-PORT requirements
• In response to the liquidity guidance, funds will want to consider whether their current liquidity risk management programs should be adjusted with respect to intra-month liquidity classification changes, liquidity classifications of foreign currencies, and whether highly liquid investment minimums appropriately reflect a fund’s risk factors, including, as applicable, asset liquidity and flow volatility
• For now, Rule 22e-4 will retain four liquidity classifications, as proposed consolidation into three categories was not adopted
• Swing pricing and hard close proposals also were not adopted

FORM N-PORT AMENDMENTS

Rule 30b1-9 under the 1940 Act currently requires registered management investment companies and exchange-traded funds organized as unit investment trusts to file a report on Form N-PORT for each month over a fiscal quarter (i.e., three reports filed each quarter). The filing must be made within 60 days of the end of the quarter. Reports on Form N-PORT include a fund’s complete portfolio holdings as of the end of the month in question, along with certain fund-level information. Much of the information reported on Form N-PORT for the third month of the fiscal quarter is made publicly available upon filing, whereas the reports for the first and second months of the fiscal quarter are not publicly disclosed.

At its August 28 meeting, the SEC amended Rule 30b1-9 and Form N-PORT to require that Form N-PORT be filed monthly within 30 days of the end of each month, with each monthly report to be made publicly available 60 days after the end of the month to which it pertains (i.e., 30 days after the deadline for filing). As a result, registered funds will file Form N-PORT 12 times annually (instead of four times) and monthly data filed on Form N-PORT will be publicly available on a 60-day delay, whereas only monthly data as of the quarter-end is publicly available currently. The data that registered funds are required to gather and report, however, will not significantly change. [3]

In its adopting release (the Adopting Release), the SEC stated that the Form N-PORT amendments are intended to “promote more effective regulatory monitoring and oversight of the fund industry.” In particular, the SEC stated that more frequent and more timely Form N-PORT filings will allow the SEC to “conduct more targeted and timely monitoring,” “analyze risks and trends more accurately,” and “better assess the breadth and magnitude of potential impacts of market events.” The SEC stated that these enhanced capabilities would allow it to respond more quickly and more effectively to developments affecting the fund industry. The SEC also stated that the Form N-PORT amendments would benefit investors by providing them with information that may help them make more informed decisions when selecting fund investments. [4]

The SEC also adopted certain technical amendments to Form N-PORT as proposed. Because reports will be made publicly available each month instead of every third month, information about fund returns and flows will be required only for the month to which the report pertains, rather than for the preceding three months, as is currently required, and funds will be permitted to report miscellaneous securities (e.g., securities that are purchased by a fund while building a position that has not yet been disclosed) on a non-public basis pursuant to Part D of Form N-PORT in each monthly report, rather than only in the report for the third month of a fiscal quarter, as is currently required. Changes to the technical requirements for reporting entity identifiers were also adopted as proposed. The proposal to present a fund’s portfolio holdings in a manner that is compliant with the requirements of Regulation S-X was not adopted, nor were certain amendments to Form N-PORT associated with the proposed swing pricing and liquidity amendments that were not adopted.

FORM N-CEN AMENDMENTS

Rule 30a-1 under the 1940 Act requires management investment companies to file annual reports on Form N-CEN. Reports on Form N-CEN include census-type information about funds and their operations, and are used by the SEC to monitor and respond to developments in the fund industry. The SEC adopted amendments to Form N-CEN that will require open-end funds that use liquidity service providers to:

• Name each liquidity service provider
• Provide identifying information, including the legal entity identifier, if available, and location, for each liquidity service provider
• Identify if the liquidity service provider is affiliated with the fund or its investment adviser
• Identify the asset classes for which that liquidity service provider provided liquidity classifications
• Indicate whether the service provider was hired or terminated during the reporting period

This information is intended to allow the SEC and other industry participants to track certain liquidity risk management practices. As with the changes to Form N-PORT, changes to the technical requirements for reporting entity identifiers also were adopted as proposed.

LIQUIDITY GUIDANCE

Rule 22e-4 under the 1940 Act requires open-end funds to adopt and implement liquidity risk management programs to reduce the risk that they will be unable to meet their redemption obligations without diluting the interests of their remaining shareholders. In lieu of the amendments to Rule 22e-4 that were included in the Proposal, the SEC offered guidance on the frequency with which the liquidity classifications of fund holdings are reviewed, the meaning of “cash” for purposes of assigning liquidity classifications, and the process for establishing highly liquid investment minimums (HLIMs). According to the Adopting Release, this guidance was provided in response to issues identified through Staff outreach and monitoring.

Frequency of Liquidity Classification Reviews

Rule 22e-4 requires funds to review their liquidity classifications at least monthly in connection with their reporting on Form N-PORT, and more frequently as needed based on changes in relevant market, trading, and investment-specific considerations that are reasonably expected to materially affect one or more of their investments’ liquidity classifications. Funds use these liquidity classifications to ensure compliance with Rule 22e-4’s 15% illiquid investment limit and, for funds that do not primarily hold assets that are highly liquid, the HLIM. The SEC observed that Staff outreach revealed multiple funds that were not prepared to review and update their liquidity classifications on an intra-month basis in response to changes in relevant market, trading, and investment-specific considerations.

Noting the importance of these liquidity classifications to a fund’s ability to comply with the limit on illiquid investments and, as applicable, its HLIM, the SEC reiterated the requirement under Rule 22e-4 to adopt policies and procedures reasonably designed to facilitate intra-month reviews of liquidity classifications when necessary. The SEC noted that such policies should identify the type and timeliness of information a fund will use to determine when an intra-month review is appropriate.

The SEC also provided examples of changes in market, trading, and investment-specific considerations that may trigger an intra-month review, such as a substantial increase in an existing position that makes the position more difficult to sell and the acquisition of a new position that affects the fund’s overall liquidity profile.

Meaning of ‘Cash’

In its determination of whether an investment is classified as highly or moderately liquid, Rule 22e-4 requires a fund to consider the time in which it reasonably expects an investment to be “convertible to cash” without significantly changing the market value of the investment. As used in the rule, “cash” means US dollars, so in the case of investments in foreign currencies or securities denominated in a foreign currency, funds must consider the time it will take to convert that currency to US dollars when assigning a liquidity classification to the investment.

In the Adopting Release, the SEC noted that the Staff observed instances of funds failing to consider the time it would take to convert a foreign currency into US dollars when classifying the liquidity of an investment denominated in that currency, as well as instances of funds classifying investments in foreign currencies as “highly liquid” merely because they are “cash,” regardless of the amount of time it would take to convert that currency to US dollars. The SEC clarified that the liquidity classifications of investments denominated in foreign currencies should reflect “reasonable expectations of the period of time in which . . . [the] currency received upon settlement can be converted to US dollars without significantly changing the currency exchange rate.”

Similarly, the SEC noted that liquidity classifications for investments directly in foreign currencies should reflect “the amount of time it is reasonably expected to take to convert a reasonably anticipated trade size of that currency into US dollars under current market conditions without significantly affecting the currency exchange rate.” The Adopting Release also cautioned that investments in foreign currencies or securities denominated in foreign currencies may be deemed illiquid based on these considerations, and that the illiquidity of such investments could have implications for a fund’s compliance with its 15% illiquid investment limit.

Highly Liquid Investment Minimums

Rule 22e-4 requires funds that do not primarily hold assets that are highly liquid investments to have an HLIM and prescribes factors to be considered in establishing an HLIM. In the Adopting Release, the SEC reiterated previous guidance on how a fund should determine its HLIM. The SEC underscored the principle that a fund’s HLIM should reflect the fund’s particular risk factors. As an example, the SEC noted that a fund that invests significantly in illiquid or less liquid investments should consider establishing an HLIM higher than that of a fund that is more liquid. The SEC also suggested that a fund with relatively high volatility in flows generally would need an HLIM higher than that of a fund with less flow volatility. The SEC also reiterated its position that fund managers have flexibility in deciding how to satisfy redemption requests, including by using cash available through a line of credit or similar arrangement or by selling assets that a fund counts toward its HLIM.

SWING PRICING AND HARD CLOSE NOT ADOPTED

Perhaps more noteworthy than the changes that were adopted are the changes that were not adopted. In the Proposal, the SEC outlined mandatory swing pricing, which would have required all open-end mutual funds—apart from exchange-traded funds and money market funds—to adjust their net asset values to effectively shift transaction costs to transacting shareholders in the event of net redemptions from the fund in any amount or net subscriptions exceeding 2% of the fund’s net assets. Although currently permitted by Rule 22c-1 under the 1940 Act, the proposal to mandate swing pricing was criticized due to concerns about implementation costs and operational complexity.

The SEC also did not adopt the related “hard close” element of the Proposal, which would have required subscription and redemption orders to be received by a fund or its agent, and not just submitted to a shareholder’s intermediary, by 4 pm to receive that day’s net asset value. This aspect of the proposal was intended to facilitate swing pricing by ensuring that the fund would possess all subscription and redemption orders for a given day, and therefore would know whether to apply swing pricing, when calculating its net asset value following the close of trading on that day.

These swing pricing and hard close proposals were loudly criticized by the fund industry, in part because of concerns that imposing such operating structures on mutual funds would have substantially changed their usefulness for certain types of investors, thereby disrupting certain well-settled market practices.

EFFECTIVE DATES

The amendments to Form N-PORT and Form N-CEN are subject to a single “extended effective date” of November 17, 2025. Funds will be required to comply with the amendments to Form N-PORT and Form N-CEN in reports filed on or after November 17, 2025, except that funds that are part of fund groups with combined net assets of less than $1 billion as of the end of the most recent fiscal year will be permitted to comply with the Form N-PORT amendments in reports filed on or after May 18, 2026.

In the Adopting Release, the SEC explained that the decision to forgo a compliance period was intended to avoid the “potential for inconsistency in practice” that may result from funds taking differing approaches to the reporting requirements in Form N-PORT during a compliance period. Funds should consider any adjustments to their Rule 22e-4 policy and procedures necessary in response to the SEC’s guidance now.

PRACTICAL IMPLICATIONS

In response to the increased reporting frequency for Form N-PORT, funds should consider whether any operational adjustments to their current reporting and filing practices are necessary. Such adjustments may include ensuring the timely availability of data provided by third parties. As several comments on the Proposal noted, the increased reporting frequency and the earlier filing deadline likely will result in increased expenses, particularly for smaller fund complexes. Depending on the significance of such expenses and whether they will be passed on to fund shareholders, funds may wish to consider how best to minimize the impact of such expenses.

For those funds with investment strategies that may be susceptible to front-running or reverse engineering, fund managers may want to consider whether the public availability of monthly portfolio holdings information, even on a delayed basis, would increase such risks and if so, any steps that may be taken to mitigate those risks. For example, funds might review their current reporting practices to determine if they are fully utilizing the ability to protect certain holdings information by identifying such holdings as “miscellaneous securities” in Part D of Form N-PORT.

Funds also should review their current reporting and portfolio holdings disclosure policies and procedures to determine if any updates are necessary to reflect the new reporting requirements. Similarly, to the extent a fund addresses the frequency of required disclosure of portfolio holdings information or the public availability of such information in its registration statement, the fund should consider whether any updates to such disclosure are necessary or appropriate.

With respect to the new disclosure obligations of Form N-CEN, funds should review any agreements with third-party liquidity service providers to ensure they do not include confidentiality or disclosure provisions that would prevent or require advance notice prior to providing information responsive to the new reporting requirements.

Regarding the guidance issued under Rule 22e-4, fund complexes will need to take more immediate action to consider its application to their current processes. Funds with liquidity risk management committees may want to add the guidance as a discussion topic to their next meeting agenda so they can consider whether formal amendments to operating procedures should be implemented. Fund managers also should be prepared to discuss the implications of the guidance with fund boards at an upcoming quarterly meeting, particularly whether such guidance necessitates any changes in the liquidity classification of certain holdings.

In sum, funds should be able to answer the following questions in the wake of the guidance:

• Does your current liquidity risk management program appropriately identify circumstances where intra-month changes in liquidity classification should be considered, and the types of information considered to identify such circumstances?
• Does your program take into account the time necessary to convert foreign currencies to US dollars when assigning liquidity classifications?
• Does your program consider asset liquidity and flow volatility in determining an appropriate HLIM?

Fund complexes should assume that questions with respect to the topics addressed by the guidance will be raised by SEC examiners immediately, and it would not be surprising if there is an industry sweep exam on these issues in the coming months.

[1] The proposed amendments to Rule 22e-4 that were not adopted included, among others, changes to the framework that funds use to classify the liquidity of their assets, changes to the frequency with which funds classify the liquidity of their assets (from monthly to daily) and a requirement that all funds, including funds that primarily hold highly liquid assets, adopt a highly liquid investment minimum of at least 10% of the fund’s net assets. Although these proposed amendments were not adopted, the SEC’s latest regulatory agenda indicates that they may be proposed again by April 2025.

[2] Form N-PORT data currently treated as confidential (e.g., certain derivatives, liquidity, and miscellaneous securities information) will remain confidential.

[3] In the Adopting Release, the SEC acknowledged that some closed-end funds may not strike a net asset value on a monthly basis due to the assets they hold or may calculate their net asset values with a significant delay. The SEC stated that the requirement to file Form N-PORT on a monthly basis nonetheless will apply to closed-end funds because they already are required to maintain a net asset value in their monthly records pursuant to Rule 30b1-9. However, to address concerns about any added operational burden for closed-end funds that may be imposed by the new monthly filing requirement, the SEC stated that closed-end funds may strike their net asset values for Form N-PORT purposes by using “internal methodologies” that those funds already use for internal reporting and to report to current and prospective investors.

[4] It is worth noting that all exchange-traded funds that comply with Rule 6c-11 under the 1940 Act already disclose their full portfolio holdings daily.

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