On January 27th, the SEC adopted new rules and rule amendments regarding money market funds. The new rules:
Place new restrictions on money market funds by requiring them to: (i) hold a minimum percentage of their assets in highly liquid securities; (ii) place limits on a money market fund's ability to acquire lower quality (Second Tier) securities; (iii) shorten the average maturity limits for money market funds; (iv) hold sufficiently liquid securities to meet foreseeable redemptions; (v) require fund managers to examine the fund's ability to maintain a stable net asset value per share in the event of shocks; (vi) limit investment in rated securities to those securities rated in the top two rating categories (or unrated securities of comparable quality); and (vii) strengthen the requirements for allowing "look through" of the repurchase issuer to the underlying collateral securities for diversification purposes.
Enhance disclosure of portfolio holdings by requiring money market funds to post on their Web sites their portfolio holdings every month, and require money market funds to report to the Commission detailed portfolio schedules every month.
Improve money market fund operations by: (i) requiring money market funds to be able to process purchases and redemptions electronically at a price other than $1.00 per share; (ii) permitting a money market fund's board of directors to suspend redemptions if the fund is about to break the buck; and (iii) expanding the ability of affiliates of money market funds to purchase distressed assets from funds in order to protect a fund from losses.