The SEC has adopted new rules it says are designed to significantly strengthen the regulatory requirements governing money market funds and to better protect investors.
Among the new mandates is money market funds have a minimum percentage of their assets in highly liquid securities so that those assets can be readily converted to cash to pay redeeming shareholders. Limits are now placed on a fund's ability to acquire lower quality second tier securities and the average maturity limits are shortened to help limit the exposure of funds to certain risks such as sudden interest rate movements, the SEC said.
Money market funds are now required to post on their Web sites their portfolio holdings and to report to the SEC detailed portfolio schedules in a format that can be used to create an interactive database so that the agency can better oversee their activities.
The new rules, adopted Jan. 27, are effective 60 days after their publication in the Federal Register, the SEC said. Mandatory compliance with some of the rules will be phased in during the year. The final rules, including compliance dates, will be posted on the SEC Web site (www.sec.gov) as soon as possible, according to the commission.