On May 26, 2026, the Securities and Exchange Commission (SEC) published a notice of its intent to grant exemptive relief permitting two interval funds to make monthly repurchase offers. The proposed relief would increase the frequency of shareholder liquidity opportunities while preserving Rule 23c-3’s existing aggregate repurchase range.
Background
Interval funds are closed-end investment companies that provide shareholder liquidity through periodic repurchase offers rather than daily redemption. Rule 23c-3 (the Interval Fund Rule) under the Investment Company Act of 1940 permits repurchase offers only at quarterly, semiannual, or annual intervals, with each offer capped between 5% and 25% of a fund’s outstanding shares.
On March 19, 2026 (as amended May 6, 2026), an application was filed for exemptive relief from certain provisions of Rule 23c-3. The application sought permission to conduct monthly repurchase offers in lieu of the quarterly maximum set by the rule.
Scope of the Requested Relief
Under the proposed order, each fund would be permitted to make monthly repurchase offers of at least 2% of its outstanding shares. Total repurchases during any rolling three-month period—whether conducted monthly or otherwise—would remain subject to Rule 23c-3’s existing aggregate quarterly range of 5% to 25% of outstanding shares.
The relief would therefore increase the frequency of liquidity opportunities available to shareholders while preserving the rule’s overall limits on the total volume of repurchases.
Regulatory Significance
The SEC’s notice reflects a measured expansion of flexibility within the interval fund framework. By maintaining Rule 23c-3’s aggregate quarterly limits, the proposed relief would permit greater repurchase frequency while maintaining the structural protections that underpin the interval fund regime.
The development also reflects the SEC’s continued openness to innovation in semi-liquid registered fund products, consistent with the broader regulatory trend toward facilitating retail investor access to private and alternative asset strategies.
Two limitations on the scope of this relief merit emphasis. First, the proposed order applies only to the two interval funds identified in the application, meaning other sponsors seeking to offer monthly repurchase programs would need to obtain their own exemptive relief. Second, the relief is relevant only to interval funds operating under Rule 23c-3. Registered tender offer funds are not subject to the rule’s frequency restrictions and therefore do not require similar relief.
Practical Considerations for Market Participants
Although the SEC’s willingness to grant this relief is significant, several practical considerations may affect the pace and breadth of adoption.
Monthly repurchase programs may introduce additional operational complexity, particularly for funds distributed through third-party platforms where trade processing, settlement, and communication workflows must be coordinated across multiple intermediaries. Sponsors with vertically integrated distribution models will likely be better positioned to implement monthly repurchase cycles efficiently.
Monthly repurchase obligations may also create liquidity management challenges for funds with significant allocations to illiquid assets, including private credit and real estate. Fund boards, advisers, and chief compliance officers should evaluate whether existing liquidity management policies and asset allocation frameworks are adequate to support more frequent repurchase activity. Robust disclosure of monthly repurchase limits, aggregate caps, and any associated risks will also be essential for funds that pursue similar relief.
Looking Ahead
The proposed exemptive order marks a meaningful step in the evolution of registered alternative fund structures. At the same time, broader adoption of monthly interval fund repurchases will likely depend on operational scalability, distribution platform readiness, and the demonstrated performance of these structures during periods of market stress.
Sponsors, advisers, and fund boards evaluating similar relief should begin assessing their operational infrastructure, liquidity management practices, and disclosure frameworks in anticipation of further developments.
Your Alston & Bird Investment Funds Group is ready to assist you with developing interval and tender offer fund structuring alternatives.
If you have any questions, or would like additional information, please contact one of the attorneys on our Investment Funds team.
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