Although the Securities and Exchange Commission had indicated it would have solutions to eradicate market timing and late trading before the year is up, the Commission is still looking at alternatives to the hard 4 p.m. close and 2% redemption fees on shares redeemed within five days. The SEC is also still looking at how to improve point-of-sale disclosure on commissions and other fees on broker-sold funds, as well as curbing soft-dollar arrangements. SEC Chairman William Donaldson made these revelations at a Securities Industry Association meeting in Boca Raton, Fla., earlier this month.
Critics of the hard close, which is meant to prevent late trading, say it would disadvantage investors on the West Coast and those who place orders through brokers or 401(k) plans, by requiring them to place their orders hours ahead of other investors. Those opposed to the 2% redemption fee, designed to prevent market timing, say it would unfairly harm long-term investors who have no intention of timing a fund but who have simply changed their mind.