Sec money market reform pdf

Report of the presidents working group on financial markets. The majority of these amendments, except for certain disclosure enhancements, will not take effect for two years. Securities and exchange commission sec adopted a final rule on money market reform that will require a meaningful change to the way funds operate. Jun 25, 2019 according to the sec, the new regulations are designed to provide structural and operational reforms to address risks of investor runs in money market funds while preserving the benefits of the.

Jpmorgan money market funds reform update jp morgan asset. In 2012, thensec chairman mary schapiro sought to propose rules that would require all money market funds to adopt a floating nav or, in the alternative. The full impact of amended rules governing money market funds is fast approaching. An investment in a money market fund is not insured or guaranteed by the federal deposit insurance corporation or any other government agency. An overview summary of the new rules the new regulations mainly focus on the following topics. The rules and forms are designed to prevent future disruptions such as the crisis that struck money market.

Sec adopts money market fund reform rules on february 23, 2010, the securities and exchange commission adopted amendments to rules 2a7 and 17a9 under the investment company act of 1940, which govern money market funds. Money market fund reform sec open meeting july 23, 2014. Investor implications the next two years will be critical for money market funds as reform may bring behavior changes, liquidity obstacles in july 2014, the u. Nasdaq is committed to servicing the fund industrys price reporting needs. Money market fund reform on july 23, 2014, the securities and exchange commission sec voted to amend rule 2a7, of the investment company act of 1940, which governs u. The widely anticipated reforms for money market funds were due for implementation in october 2016, drastically changing the way investors and the affected fund providers view them as an. What you need to know about sec money market reform keywords. This event prompted significant redemptions from institutional prime money market funds, putting them under severe stress and leading the u. However, commenters note that the sec can avoid being controlled by the fsoc by simply explaining. S703 staff analysis of data and academic literature related to money market fund reform. What you need to know subject in an effort to address concerns expressed by regulators that money market funds may contribute to financial instability, the securities and exchange commission recently adopted rules intended to change money market funds held by institutional inven96i.

The july 29, 2014 financial services alert included a brief overview of the secs recent adoption of amendments to the rules governing money market funds mmfs. The commission will consider whether to adopt final rules that reform the way money market funds are structured and operate in order to better equip them to address run risks, while preserving the benefits of money market funds. Sec adopts money market fund reform rules planadviser. Money market funds will be categorized into two types of money market funds. Among the final reforms was a requirement that institutional prime and municipal. The secs adoption of the amendments is the latest action taken by u. Jul 23, 2014 the sec says that, when it adopted the 2010 amendments, it soon after recognized that the recent financial crisis raised additional questions of whether more fundamental changes to money market funds might be warranted see sec analyzes money market fund reform. Eu money market fund reform regulation finally published. The nav method does not change the tax treatment of, or broker reporting requirements for, dividends paid by floatingnav money market funds.

Oct 18, 2018 six years later in 2014, the securities and exchange commission sec issued new rules for the management of money market funds to enhance the stability and resilience of all money market funds. The new regulations, along with the 2010 amendments to the rule, are intended to address the money market fund risks that became apparent during the 2008 financial crisis. Money market funds invest in high quality, shortterm debt securities and pay dividends that generally reflect shortterm interest rates. Because the valuation process varies from firm to firm, nasdaq is adding a calculation time. How do the mfqs money market message formats align to the sec money market reform. Since the credit crisis in 2008, regulators have been working hard to update laws. Examination of money market fund regulation since the.

In the money market fund reform act of 2010, the sec outlined new data elements, such as weighted average life and seven day gross yield, to improve money market fund transparency. Stay current sec takes action on money market fund reform. Money market reform is a set of sec rule amendments meant to address any potential financial instability that could be caused by money market funds. The collapse in 2008 of the reserve primary fund, one of the most. Sec approves money market fund reform at an open meeting held on january 27, 2010, the securities and exchange commission sec approved both new rules and amendments to the existing rules under the investment company act of 1940, as amended the 1940 act, that govern money market funds the reforms. The 2014 money market fund reform adopting release is available at.

In response to these rule amendments and the resulting market changes, ubs is altering its money market fund platform and launching new products. The sec should conduct a study of the effects of mmf reform before. Intended to make money market funds more resilient by reducing interest rate, credit, and liquidity risks. Commission sec under rule 2a7 of the investment company act of 1940. The securities and exchange commission commission or sec is adopting amendments to the rules that govern money market mutual funds or money market funds.

Sec takes action on money market fund reform by the investment management practice overview the securities and exchange commission sec has completed its first step toward money market fund reform by adopting new rules and amendments to existing rules, including rule 2a7, under the. As part of the initial 0050 message format release, nasdaq added these new data elements as well as net asset value nav to the mfqs system for voluntary reporting purposes. Money market funds and systemic risk to address potential for money market funds to pose systemic risk to broader financial markets what makes money market funds vulnerable to runs how to view money market funds in context of systemic risk analysis possible options for further regulatory reform and implications floating nav. If a 401k includes a money market fund in its investment lineup, small business fiduciaries should understand the consequences of these reforms in order to decide if their plans money market fund should be replaced in advance of the new rules. Money market reform the securities and exchange commission sec adopted a series of amendments to its rules on money market funds rule 2a7. Money market fund reform a summary of significant changes.

Money market fund reform, investment company act release no. Perry golkin professor of law, university of pennsylvania law school. Viewpoint jun 2018 update us money market fund reform. Because we focus on the highestquality, shortterm money market instruments, we remain confident in the stability of our money market funds. Jul 23, 2014 money market fund reform sec open meeting july 23, 2014. In response to an industry question regarding how a financial intermediary determines beneficial ownership, sec staff refers to securities exchange act. Floating nav require certain money market funds to maintain a. The sec would also propose an amendment to the issuer diversification provisions of rule 2a7. Money market reform frequently asked questions on july 23, 2014, the securities and exchange commission sec adopted amendments to rule 2a. The following is a further summary of the final and proposed rule amen. Sec money market reform will affect many small business 401ks. The broken buck stops here embracing sponsor support in money. As the primary regulator of mmfs, the sec is best placed to perform this analysis. Under the amendments to rule 2a7 adopted by the securities and exchange commission sec in july 2014, jpmorgan money market funds mmfs will.

Sec money market fund reform rules, effective in may 2010, outlined more conservative investment parameters related to credit quality, maturity and liquidity. Money market funds are required to be in full compliance by october 14, 2016. In 2014, reforms for us money market funds mmfs were adopted to address problems that surfaced during the 2008 financial crisis 2008 crisis. Money market funds, sometimes called money funds, are a type of mutual fund developed in the 1970s as an option for investors to purchase a pool of securities that generally provided higher returns than interestbearing bank accounts. For example, the sec requested comments on a report released in october 2010 by the presidents working group on financial markets that summarized various money market fund reform options. Money market reform and your vanguard investments vanguard. The reforms are intended to reduce investor risk and increase transparency during periods of market stress.

We do not believe a roll back of the rules is advisable without first studying the effects of mmf reforms and the implications of any potential changes. Aug 12, 2014 on wednesday, july 23rd,the sec voted 32 to adopt new rules aimed at reforming money market funds,which are governed by rule 2a7 under the investment company act of 1940. Enhanced reporting more liquidity emergency measures. In addition, the sec is adopting amendments designed to make money market funds more resilient by increasing the diversification of their portfolios, enhancing their stress testing, and improving transparency by requiring money market funds to report additional information to the sec and to investors. Eu money market fund reform regulation finally published almost four years after the european commission proposed new rules to regulate money market funds mmfs, the regulation on money market funds mmf regulation has been published, starting the clock ticking on the implementation timeline. Revised money market fund statistics data as of march. New rule changes impact money market funds in retirement plans money market funds mmfs are a popular and widely used capital preservation option within retirement plans, and it is important for plan fiduciaries to understand new legislation impacting these funds. Securities and exchange commission, money market funds statistics, data. Establishes 3 categories of money market fundsretail, government, and institutional. We expect no changes in our investment philosophies, objectives, strategies, and overall portfolio management processes as a result of the sec rules. In 2014, reforms for us money market funds mmfs were adopted to.

The widely anticipated reforms for money market funds were due for. The focus of this reform is those money market funds that have tended to exhibit greater volatility. May 19, 2016 the sec discusses these terms in the 2014 mmf rulemakings adopting release 9 and in the 2014 money market fund reform frequently asked questions 10 maintained on the secs website. In the staffs view, governmentagency means a government money market fund that has chosen to rely on the ability to impose a liquidity fee or gate pursuant to rule 2a7 c 2 iii, whereas exempt government means a government money market fund that has not chosen to do so. In the sec money market reform act of 2014, the commission indicates that fund families fund accountants should calculate floating navs periodically during the day e.