The Investment Company Institute has endorsed the Securities and Exchange Commission’s proposal to install a mandatory redemption fee on all short-term mutual fund transactions but says 2% should be a minimum redemption fee.

The ICI itself, back in October, suggested a 2% mandatory redemption fee as a measure against unethical market timing. The fund lobbying group’s acting counsel, Amy Lancellota, said in a letter to the SEC, "Our strong support for this concept, in part, is based on the fact that the fund retains the redemption fee for the benefit of the shareholders remaining in the fund."

Calling redemption fees just "part of a multifaceted approach to protecting shareholders," the ICI said that the rule "would ensure that all proceeds would benefit long-term shareholders.

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