Read the Full Report

Kristen Malinconico Kristen Malinconico
Senior Director, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce


July 19, 2023


The SEC is proposing changes to the rules for open-end mutual funds, a popular investment choice in retirement plans. The proposed changes include mandatory "swing pricing" and a "hard close" on transactions.  Here is what these mean in simpler terms: 

  • Swing pricing: Adjusts the price of mutual fund shares when there are large flows of money into or out of the fund for purposes, as the SEC contends, of minimizing dilution of existing investors.
  • Hard close: Mandates funds must receive trades by no later than 4pm ET, meaning investors must request trades much earlier in the day, for example, by noon ET. 

An in-depth analysis from the new U.S. Chamber study spotlights the breadth and magnitude of the impact the SEC's proposals could have on investors, showing:

  • Lower returns for retirement savers: The SEC's proposed swing pricing and hard close rules on open-ended funds could significantly impact retirement savings, potentially dwindling assets by $32 billion annually. Moreover, these changes could result in a staggering loss of over $50,000 in savings across 26 years for the average ‘set and forget' retirement investor.
  • Transaction delays: Everyday retirement plan transactions could take longer to complete due to the SEC’s proposed changes, exposing assets to unnecessary market risks during this period.
  • Uneven playing field: The hard close proposal may leave retirement plan participants at a disadvantage compared to higher-income investors due to the early submission deadline.
  • Unforeseen costs and red tape: These changes will require massive system overhauls, introducing high costs passed onto plan participants, further eroding savings. Moreover, a projected rollout period of 3 to 5 years could present major practical challenges.

What’s Next? Bipartisan opposition is rising against the SEC's swing pricing and hard close proposals. Sen. Bill Cassidy (R-LA) and Rep. Virginia Foxx (R-NC) warned SEC Chairman Gary Gensler that these rules could restrict mutual fund trades, risk retirement plans, and have 'devastating consequences' for U.S. savers. Furthermore, Rep. Brad Sherman (D-CA) expressed concern that the proposals might disadvantage West Coast and Hawaiian investors due to time zone disparities 

Latest developments: On July 12, 2023, the SEC dropped the swing pricing component for new rules governing money market accounts. However, a looming threat remains for the millions of Americans who depend on open market funds for investing in their retirement security.

Bottom line: The SEC's swing pricing and hard close proposals will hurt retirement savers, and create an uneven playing field for investors. If the SEC wants to protect investors it would be better served by withdrawing these changes to retirement funds.

Read the Full Report

About the authors

Kristen Malinconico

Kristen Malinconico

Kristen Malinconico is Senior Director for the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness. She leads the Center’s portfolios for asset management, derivatives, and fiduciary issues.

Read more