Last month, Delta Data hosted a collection of clients and mutual fund industry leaders in Boston for a roundtable discussion that included some of the investment community’s most influential contributors.

The invitation-only annual forum on March 28, 2023, featured an agenda that included in-depth discussions and insightful presentations addressing the key forces shaping the current state of mutual fund management and operations today.

Participants in the Roundtable featured a range of clients and financial industry experts, including representatives from top US banks, retirement recordkeepers, and investment managers. Representatives from the Investment Company Institute (ICI) and the Depository Trust and Clearing Corporation (DTCC) were also in attendance to offer insight and contribute to the series of conversations.

As we reviewed in Part I of our Roundtable Recap, main topics of interest included candid conversations moderated by leaders from Barrington Partners, Charles Schwab, and T. Rowe Price surrounding onboarding CITs and SMAs and non- and semi-transparent ETFs. In addition, swing pricing and alternatives to the 4PM hard close, ESG data, and the potential impacts of the current banking situation were also areas of discussion for the group.


ESG Data

Representatives from Barrington Partners led a session surrounding environmental, social, and corporate governance (ESG) data.

The growing influence of ESG data and ratings on the allocation of capital has undoubtedly brought with it increased scrutiny. ESG data and ratings providers are not regulated in the same way as credit rating agencies and financial intermediaries; however, this could change.

The market first needs to reach an agreement on what ESG means and how such factors should be measured and reported on before there is regulatory oversight, and additional transparency from ESG ratings providers is critical.

The significant focus of this discussion centered on the Morningstar ESG factors, which are now making it easier to do some data analysis on not only if a product is ESG, but which areas of ESG they invest in. Consultants use this analysis to figure out which funds work best for the clients.

There isn’t really a huge issue with ESG factors from an operational perspective, as this carries more weight and impact on the distribution side.


Swing Pricing and Alternatives to the 4PM Hard Close

John Randall, Director of Operations and Distribution at the Investment Company Institute (ICI) led a discussion around the Security and Exchange Commission’s (SEC) proposed rule that would impose swing pricing on nearly all mutual funds. The proposal also includes a provision that would put a hard close of trading at 4 p.m. Eastern Time.

ICI member boards are concerned about swing pricing and the proposed hard close, and the ICI argued in comment letters to the SEC that both would negatively impact the fund industry. Overall, there has been resounding pushback from the entire industry, but despite the overwhelming negative response, the swing pricing proposal is not dead. The anticipation is that there will be action taken on this, but it remains to be seen what action will be.

4PM Hard Close

Many of the problems surrounding the SEC’s proposal were addressed in the discussion. Under a hard close, a transaction request must be received by the fund, its transfer agent, or the National Securities Clearing Corp. by 4:00 p.m. Eastern Time to receive that day’s price. Therefore, 401(k) recordkeepers would need to make significant enhancements to their systems and would likely require plan participants who wanted that day’s price to get their transaction requests to the recordkeeper much earlier in the day, although it’s unclear at this point how much earlier. It changes the dynamic of when you’d be able to trade because you hold your shares with a recordkeeper or intermediary.

The consensus around the 4 p.m. hard close is that the proposal is not workable for recordkeepers, and retirement plan investors would be severely harmed, which is likely to make it impossible for 401(k) plans to place trade orders for their participants. With a hard close, getting the transaction request to the plan recordkeeper before the market closes would not be enough to get that day’s price.


Alternatives to the SEC’s swing pricing proposal were also discussed. Fees and gate might be an avenue to pursue in lieu of other options. Another alternative addressed was large trade notification as a prescribed requirement, however, it was acknowledged that this idea could face bigger challenges. Variable feed was also brought up as an option, but this may create competitive advantages for larger firms with more assets.

Ultimately, the industry is waiting to see if the SEC comes back to the table on this issue and what concessions they may be willing to make as it relates to their swing pricing proposal.


Potential Impact of Current Banking Situation

This year’s roundtable ended with a discussion on potential impacts of the current banking situation. SVC was the first “social media” driven bank failure. It was SVC’s mode of operations that led to its demise. They disclosed that they couldn’t cover and communicated this before they tried to raise the needed capital. This led to questions about whether SVC was truly insolvent. Ultimately, investors in the bank got hurt.

The biggest issues asset managers are seeing in the fallout from the SVC failure are inquiries from clients and intermediaries concerned about their own exposure and how it impacted returns. Asset managers are trying to be proactive in addressing these questions and concerns by publishing answers on their respective websites.


The event was an informative outlet and useful exchange of insights and ideas for all participants. This annual roundtable is just one of many ways Delta Data seeks to engage clients and facilitate industry thought leadership while reinforcing Delta Data’s commitment to serve the client. These roundtables are part of an industry-leading, personalized, and consistent client experience across all touchpoints.

Contact us to learn more about Delta Data’s client-centric approach.