Insights & News

Joan Swirsky Quoted on Money Market Funds in Money Fund Report and Ignites

June 30, 2015
Press Clippings
Stradley Ronon Counsel Joan Swirsky contributed to two separate articles published by Money Fund Report and Ignites regarding money market fund reform.

Joan contributed to "Minimal effect on retirement plans, experts say of MMF reform," from Money Fund Report, where she discussed the options that funds have after the reform regarding their retirement plans as well as NAVs, fees and investment options.

"Many money-market funds used in retirement plans will be permitted to continue to seek a stable NAV if they choose to do so," Swirsky explained. "This is because the Securities and Exchange Commission's definition of a retail fund - a fund with 'policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons' - includes beneficial owners who own through retirement plans. Funds that include non-natural persons will need to cleanse those owners in order for a fund to be a viable retail option within a DC plan."

Joan also noted the addition of fees and gates to some funds, and even the floating NAV, does not necessarily change the investment-risk profile, and the securities these funds hold put them even lower on the risk spectrum.

In the Ignites article, "Next Up for Money Funds: 'Enhanced' Stress Testing," Joan comments on the "enhanced" stress testing funds are going through once their decisions about things like NAVs (mentioned above) are made. Enhancements include the requirement that funds test their ability to maintain at least 10% of the portfolio in assets that can be liquidated within five business days, test their ability to minimize principal volatility, and must include a summary of significant assumptions made when performing stress tests.

Joan Ohlbaum Swirsky, counsel at Stradley Ronon, also says that revamping the stress tests will be “challenging,” although the fact that firms already have a framework in place because of the 2010 rule will ease the process somewhat.

To read the entire Ignites article, click here (subscription required).

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