The Securities and Exchange Commission (SEC) on Thursday proposed amendments to Rule 17a-7 of the Investment Company Act of 1940, which permits cross-trades between registered funds and their affiliates under certain conditions.
These changes aim to modernize and broaden the rule, notably by restoring the ability to trade most fixed income securities, a practice restricted since the adoption of the fund valuation rule in 2020.
According to SEC Chairman Paul S. Atkins, these cross-trades help reduce transaction costs for funds, benefiting investors. The amendments also include enhanced investor protections, improved transparency with aggregated reporting of cross-trade activities, and updated conditions related to pricing and oversight of trades.
The proposal will be officially published on SEC.gov and in the Federal Register, with a 60-day public comment period following publication.