Investment Partner Discusses Interfund Lending in Ignites

An article in Ignites reports that in 2016, fifteen fund groups obtained the SEC’s permission to launch interfund lending programs and that since Jan. 1, 2017, the SEC has approved eight applications. The article states that despite swift approvals by the Commission, there has been only one request for exemptive relief in 2017. The piece explains that fund groups have sought permission from the SEC to make loans between funds as a solution to the stifling of liquidity. Firms have sought interfund lending relief as an “alternative or supplement” to a line of credit, outlined investment management partner Brian McCabe (Boston) in the article. Despite the recent decrease in new interfund lending applications, one factor that may spur future requests is banks’ decreased willingness to extend credit because of more onerous capital requirements, Mr. McCabe noted.