On April 10, 2019, the SEC staff (Staff) prepared new FAQ #34 under its Investment Company Liquidity Risk Management Programs Frequently Asked Questions to address the treatment of securities that trade in markets closed for extended holidays (e.g., Chinese New Year) with respect to requirements under Rule 22e-4 under the Investment Company Act of 1940 (the “Rule”), which governs fund liquidity risk management programs.
In new FAQ #34, the Staff indicates that it would not object if a fund does not file Form N-LIQUID for an investment that becomes illiquid solely due to an extended holiday closure. The Staff noted, among other things, that such investments are illiquid for a known, temporary duration, and that a fund can plan its liquidity risk management in advance and notify relevant parties in advance, including its board of directors. The Staff indicates that such advance notification would satisfy the board notification requirement under the Rule.
Click here to access the FAQ.