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SEC approves reforms to money market funds

  • SEC (US Securities and Exchange Commission) Image

Jul 25, 2014

At its July 23, 2014, meeting, the SEC adopted a final rule that will reduce the risk of runs in money market funds (MMFs) by requiring certain MMFs to use a floating net asset value (NAV) instead of a stable NAV. The final rule also contains new requirements related to redemption gates and liquidity fees.

The final rule was issued concurrently with a proposal from the Treasury Department and the IRS that (1) allows an MMF relief from tracking individual sales when complying with “wash sale” rules and (2) simplifies the basis for calculating gains and losses.

In addition, the SEC issued proposed and reproposed rules related to (1) MMF communications to investors and (2) the replacement of credit rating references in Rule 2a-7 and Form N-MFP with other factors a fund would use to assess liquidity and credit worthiness of investments to comply with Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

For more information, see the related Deloitte Accounting Journal entry, the SEC’s final rule and proposed rules, and the speeches by SEC Chair Mary Jo White and Commissioners Luis A. Aguilar, Michael S. Piwowar, Kara M. Stein, and Daniel M. Gallagher on the SEC’s Web site.

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