Money Market Fund Reform Implementation Resource Center

Amendments to the rules that govern money market funds, adopted by the Securities and Exchange Commission (SEC) in July 2014, will impose significant structural changes on the money market fund industry. According to the SEC, the new rules are designed to address money market funds’ susceptibility to heavy redemptions in times of stress, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks, while preserving, as much as possible, their benefits.

The changes will require institutional prime and institutional tax exempt money market funds to sell and redeem shares on a floating net asset value (NAV) and to round prices and transact in fund shares to four decimal places. The new rules also allow—or, in certain circumstances, require—money market funds to impose a liquidity fee or redemption gate if a fund’s weekly liquid assets fall below a certain threshold or if the fund’s board determines such action to be in the best interests of the fund.

To assist funds and fund intermediaries in implementing the final rules, ICI’s Money Market Funds Advisory Committee has created a memo explaining the various actions a money market fund may take to ensure that its intermediaries are implementing the fund’s policies and procedures in compliance with the amendments. The committee also has created form documents relating to the oversight of intermediaries under the money market fund amendments. These include:

• an annotated prototype of policy and procedures for retail money market funds;
• a form amendment to amend existing agreements among intermediaries, distributors, and funds;
• a form certification regarding beneficial ownership of retail money market funds; and
• a form notice to serve as a reminder regarding intermediaries’ responsibilities with respect to retail money market funds.

In addition, ICI’s operations and advisory committees, which include funds, intermediaries, and related service providers, have formed four core working groups in the following areas:

• The Retail Versus Institutional Customers Working Group is addressing the challenges of categorizing shareholders for retail versus institutional money market funds, based on the definitions outlined within the final rules.
• The Four-Decimal Point NAV Calculation Working Group is addressing investor-related systems and processing considerations for floating NAV money market funds and their adoption of basis-point pricing.
• The Liquidity Fees/Redemption Gates Working Group is addressing operational considerations and challenges related to the imposition and/or removal of fees and gates as permitted by the final rules.
• The Intraday Processing for Floating NAV Money Market Funds Working Group is addressing the operational challenges and considerations related to calculating multiple NAVs in one business day for floating NAV money market funds.

This resource center will be updated with the latest information regarding working group meetings and agendas, working and final documents, as well as industry and ICI resources concerning money market funds. For more information, use the blocks below.