SEC Turns to Swing Pricing, Structural OEF Redesign
As anticipated, the SEC today voted 3-2 to advance swing pricing and other structural changes to open-end funds (OEFs). Key to this proposal is to the Commission’s controversial MMF draft (see FSM Report MMF19) is swing pricing, with Chairman Gensler laying out how he believes swing pricing would end first-mover advantage and thus improve fund stability. The proposal also imposes stiff new liquidity standards, with Commissioner Uyeda dissenting from this and the rest of the proposal on grounds that only bank-loan funds have proven to be demonstrably illiquid under stress.
BIS Announces DeFi Foreign Exchange Pilot for CBDCs
Continuing its CBDC pilots, the BIS today announced the launch of Project Mariana, a system seeking to use DeFi protocols to automate CBDC foreign-exchange settlements. Project Mariana will operate in Switzerland, France, and Singapore, exchanging wholesale CBDCs. The BIS is interested in exploring the application and design of automated market markers in wholesale CBDC exchanges, the effectiveness of a supra-regional network for cross-border settlement, and potential governance models of wholesale CBDCs.