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SEC Rule 22c-1

Governs how registered investment companies must price their redeemable securities (e.g., mutual fund shares) when those securities are sold, redeemed, or repurchased.

Rule Overview

Jurisdiction: United States

Regulator: SEC

Topic: Valuation of Securities

Overview
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Its central goal is to ensure fair treatment of investors by requiring that transactions occur at prices based on the current net asset value (NAV) next calculated after an order is received.

In order to accomplish this the rule allows for price adjustments for securities issued in the context of mergers or asset acquisitions under specific conditions.

To mitigate dilution from large purchase/redemption activity open-end funds (excluding money market funds and ETFs) may use swing pricing to adjust their NAV.

The fund’s board of directors is responsible for setting and approving the timing of NAV calculations and any changes.

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