Participants in the US leveraged loan market have asked the US Securities and Exchange Commission to revise parts of a liquidity proposal that could hurt mutual funds that provide financing to non-investment-grade companies. Firms including Credit Suisse Asset Management, BlackRock and OppenheimerFunds, and trade body The Loan Syndications and Trading Association, asked the regulator in January to reconsider ordering mutual funds and exchange-traded funds (ETFs) to rank holdings according to the time it would take to sell the asset. The firms said that classifying investments into six categories based on the number of days that it would take to convert assets into cash, as the SEC requested, is challenging for loans due to long settlement times. "The SEC's proposal to put each instrument into one of six liquidity classifications assumes a degree of certainty and precision that simply does not exist," Bram Smith, the executive director at the LSTA, said in a letter to the regulator on January 13.
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