The SEC has announced that it will hold an open meeting on January 27, 2010 at 10:00 AM (EST) to consider its previously proposed rule amendments related to money market mutual funds. The SEC's announcement states that at the meeting the Commission will:
consider a recommendation to adopt new rules, rule amendments, and a new form under the Investment Company Act of 1940 governing money market funds, to increase the protection of investors, improve fund operations, and enhance fund disclosures.
Proposed on June 30, 2009, the rule and form amendments are intended to tighten restrictions on money funds and are aimed at increasing their stability and preventing the kind of sudden vulnerability they suffered last fall due to liquidity problems and market events. The proposed amendments to the rules governing money market funds, if adopted, would tighten the risk limiting parts of Rule 2a-7, including credit quality, maturity, and liquidity, increase the transparency of money market funds to both the Commission and investors, and lessen the effect when a particular fund breaks the buck and decides to liquidate.
The rule proposal also solicited comment on several concepts of potential future regulation of money market funds:
- Whether stable net asset value should be abandoned in favor of a floating rate;
- Whether funds should be permitted to make redemptions in kind to institutional shareholders;
- The appropriate role of credit rating agencies. The questions with respect to credit rating agencies would include the possibility that boards would designate certain credit rating agencies (which would be routinely reevaluated) that the fund could rely on to make purchased decisions and use to monitor securities after purchase. The designation would be based on the NRSROs performance, accuracy etc; and
- How the rules may better address the risks of investing in SIVs and other asset backed securities.
The proposing release generated over a hundred comment letters, including one submitted by the Forum. Given the level of comments and the widespread effect the rules as proposed would have on the money market fund industry as a whole, it is likely that there will be many changes from the proposals in the final rules, if adopted by the Commission.
At the same January 27, 2010 meeting, in addition to the money market reforms, the Commission will also consider "a recommendation to publish an interpretive release to provide guidance to public companies regarding the Commission's current disclosure requirements concerning matters relating to climate change."
The January 27 meeting will begin at 10:00AM, and be held at the SEC’s Washington, DC headquarters, located at 100 F Street NE. The meeting is open to the public on a first come, first served basis. The meeting will also be webcast via a link on the Commission’s website.
The full text of the Commission’s Sunshine Act Notice is available at: http://www.sec.gov/news/openmeetings/2010/ssamtg012710.htm
The full text of the money market rule proposals is available at: http://www.sec.gov/rules/proposed/2009/ic-28807.pdf
- “SEC Proposes Money Market Reform Options,” June 24, 2009
- “President’s Plan Maintains and Strengthens SEC’s and CFTC’s Powers,” June 18, 2009
- “Schapiro Affirms Role of Directors in Money Market Reform,” June 9, 2009
- “Forum Comments on Potential Money Market Reforms,” June 1, 2009
- “Chairman Schapiro’s First Address to the Fund Industry,” May 4, 2009
- “Donohue Outlines IM Regulatory Priorities,” March 24, 2009