SEC Proposes Overhaul of Cross‑Trading Rule for Registered Funds

In a recent proposal, the Securities and Exchange Commission (SEC) asked to amend Rule 17a‑7, the governing standard for cross‑trading among registered investment funds. The changes would broaden the classes of trades eligible for cross‑trading, tweak the method of calculating trade pricing, and—most notably—transfer day‑to‑day oversight responsibilities from fund senior executive staff to the fund’s chief compliance officer. For asset‑management firms, the proposal means a more concentrated compliance function will be responsible for ensuring trades are fair, properly priced, and compliant with both SEC and investment adviser regulations. Firms already conducting cross‑trading will need to review internal controls and staff training to meet the new reporting and oversight obligations. If adopted, the rule will tighten regulatory scrutiny of intra‑fund trades, potentially affecting liquidity strategies and client disclosures. The proposal is in the rulemaking phase, so firms should monitor its progress closely and prepare to adjust compliance workflows accordingly.