Why is the TSP placing restrictions on the number of interfund transfers a participant may make each month?

The TSP is a retirement savings and investment plan. Investment choices should be made with a long-term objective based on a participant's time horizon. Although the TSP recognized that, once we moved to the new daily valued system, some participants might engage in market timing activities, the practice was minimal at first.

Now, however, a very small number of TSP participants are engaging in frequent trading to such an extent that it is having adverse effects on other participants. For example, in September and October of 2007, the average I Fund daily trade amount was $224 million. This compares to average daily I Fund trade amounts of $49 million in 2006 and $27 million in 2005.

In September and October, 63% (or $142 million) of the $224 million traded was attributable to participants who had traded the I Fund eight or more times in the prior 60 days. Trade volume is up significantly, and the majority of this increased volume is attributable to less than 3,000 TSP participants ... more.

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