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Swing pricing allows a fund manager to transfer to redeeming or subscribing investors the costs associated with their trading activity, thus potentially discouraging large flows. This liquidity management tool, which is already used in major jurisdictions, may also help mitigate systemic risk. Here we develop and apply a methodology to investigate whether swing pricing does in fact help dampen flows out of funds, especially during periods of market stress. Drawing on evidence of first-mover advantage within a group of ‘swinging’ corporate bond funds, we provide policy considerations for enhancing the tool’s effectiveness as a systemic risk mitigant.

Banks and Banking --- Finance: General --- Financial Risk Management --- Public Finance --- Model Construction and Estimation --- Quantitative Policy Modeling --- Financial Crises --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- General Financial Markets: Government Policy and Regulation --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- International Financial Markets --- Taxation, Subsidies, and Revenue: General --- Portfolio Choice --- Investment Decisions --- Finance --- Financial services law & regulation --- Public finance & taxation --- Systemic risk --- Liquidity risk --- Asset management --- Risk mitigation in revenue administration --- Liquidity management --- Financial sector policy and analysis --- Financial regulation and supervision --- Asset and liability management --- Revenue administration --- Financial risk management --- Asset-liability management --- Liquidity --- Economics --- United States