In its press release, SPARK notes that SEC Rule 22c-2 permits mutual funds to impose redemption fees on shareholders. The rule also requires funds to enter into written agreements with intermediaries (such as retirement plan trustees and recordkeepers) obligating the intermediaries to provide the funds with certain shareholder identity and transaction information. In addition, the agreements must contain a provision requiring the intermediaries to carry out the funds’ instructions to restrict or prohibit further purchases or exchanges by any shareholder identified by the funds as having engaged in trading that violates the funds’ market timing policies (See Timers’ Trading Could be Cut Back under New Rule ). The deadline for having contracts in place is October 16, 2006.
“A SPARK Institute member task force has been working for several months on developing sample language for these contracts, as well as standards for the type of data collected and the format in which it is transmitted,” said Larry Goldbrum, General Counsel of The SPARK Institute, in the release. “Unlike other models we have seen, The SPARK Institute’s sample contract language is designed to address the unique circumstances and needs of retirement plan service providers.
For a copy of the sample contract language, call Jeff Close at 860-658-5058.