SEC Proposes Amended Rules for Money Market Funds

July 28, 2009
The SEC recently proposed for public comment amendments to Rule 2a-7 under the Investment Company Act of 1940 that are intended to enhance the regulatory regime for money market mutual funds. This update examines the proposed rule, which would strengthen the risk-limiting requirements of Rule 2a-7 with respect to portfolio quality and maturity, establish new liquidity requirements for money funds, require money funds to disclose portfolio information on a more frequent basis, and mitigate the negative impact felt by shareholders of money funds that liquidate upon “breaking the dollar.”