Insights & News

A Swing and a Miss!
Swing Pricing Strikes Out in SEC’s Money Market Fund Reforms

August 14, 2023
Client Alert

At a meeting on July 12, 2023, the U.S. Securities and Exchange Commission (SEC), in a 3-2 vote, adopted amendments to Rule 2a-7 under the Investment Company Act of 1940 (1940 Act) that impact the operation and management of money market funds. Here is what you need to know. 

Key Items Included in Rulemaking Package

  • Removal of redemption gates from Rule 2a-7.
  • Modified liquidity fee framework:
    • Removal of the tie between weekly liquid assets (WLA) and liquidity fee requirements.
    • Mandatory liquidity fees for institutional prime and institutional tax-exempt money market funds.
    • Discretionary liquidity fees for nongovernment money market funds.
  • Changes to portfolio liquidity requirements:
    • Increase daily liquid asset (DLA) and WLA requirements to 25% and 50%, respectively.
    • Board notification and public SEC filing if a money market fund has less than 25% or 12.5% of total assets invested in WLA or DLA, respectively.
    • Changes to stress testing requirements to require testing of the ability to maintain a sufficient liquidity level under specified hypothetical events.
  • Permit stable net asset value (NAV) money market funds to use share cancellation in a negative interest rate event, subject to board determinations and disclosure requirements.
  • Amendments to SEC reporting requirements on Forms N-MFP, N-1A, N-CR and PF that will require additional items to be reported to the SEC.
  • Clarifications on dollar-weighted average portfolio maturity (WAM) and dollar-weighted average life maturity (WAL) calculations. Read more....


For the second alert in our two part series, CLICK HERE for Full Disclosure: Reporting and Disclosure Obligations in the SEC’s Money Market Fund Reform

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.
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