The top U.S. securities regulator on Thursday approved rules designed to protect mutual fund investors from the effects of a sudden selloff, but it left for another day some of the dicier issues involved.

The U.S. Securities and Exchange Commission's new rules take aim at liquidity issues of the $18 billion traditional mutual fund market. But the agency deferred action on a separate plan to regulate the use of derivatives in funds and carved out significant exemptions for exchange-traded funds.

Thursday's action was part of a sweeping set of reforms that SEC Chair Mary Jo White has sought in the asset management industry, which includes the open-end fund market. On Thursday she said the SEC will finish rules on how the funds use derivatives "in the near term" and is also working on annual stress testing for large investment advisers.

White said the rules have been strengthened since they were first proposed more than a year ago. They are "better tailored to the liquidity risks faced by different kinds of funds, with an improved classification scheme for the liquidity of fund investments and a more targeted approach to ETFs," she said before the vote.

But the mutual fund and ETF industry did win some major concessions. The three members of the SEC unanimously approved a final version that exempts "in kind" exchange-traded funds, those that honor redemptions in securities instead of cash, from some of its requirements.

Several, but not all, ETF issuers asked to keep their products exempt from the rules because they often meet redemption requests from large sellers by handing over stocks or other securities, rather cash. The issuers had said the proposal better fit mutual funds that face pressure to raise cash when investors head to the exits.

Under the final rules, funds would have to classify investments into the categories of highly liquid, moderately liquid, less liquid and illiquid. They also would be permitted to classify investments by asset class. The first draft had proposed stricter definitions of categorizing investments.

The new version also keeps in place a requirement that funds keep on hand a certain level of assets that can be converted into cash in three days, but leaves it to the funds' boards to decide how to rectify any dip below that threshold. The original proposal had blocked funds from buying any more assets until they got back up to the minimum.

That change should reassure some ETF managers who said that being prevented from buying some assets could contradict their strategies.

ETFs have faced fears that they cannot manage rampant selling. On Aug. 24, 2015, heavy demand to sell U.S. ETFs pushed many of their market prices far below the value they could have fetched if they had been redeemed by the issuer.

But ETFs operate differently from mutual funds because most individuals sell them in the public market and cannot redeem them directly with the issuers.

This article was provided by Reuters.