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GAO-14-859R 1 (2014-08-28)

handle is hein.gao/gaobadqoh0001 and id is 1 raw text is: c AO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-326195 August 28, 2014 The Honorable Tim Johnson Chairman The Honorable Michael D. Crapo Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Jeb Hensarling Chairman The Honorable Maxine Waters Ranking Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Money Market Fund Reform; Amendments to Form PF Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (Commission) entitled Money Market Fund Reform; Amendments to Form PF (RIN: 3235-AK61). We received the rule on July 23, 2014. It was published in the Federal Register as a final rule on August 14, 2014, with a stated effective date of October 14, 2014. 79 Fed. Reg. 47,736. This final rule amends the rules that govern money market mutual funds (or money market funds) under the Investment Company Act of 1940. The Commission designed the rule 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 rule removes the valuation exemption that permitted institutional non-government money market funds (whose investors historically have made the heaviest redemptions in times of stress) to maintain a stable net asset value per share (NAV) and is requiring those funds to sell and redeem shares based on the current market-based value of the securities in their underlying portfolios rounded to the fourth decimal place (e.g., $1.0000), i.e., transact at a floating NAV. The rule also gives the boards of directors of money market funds new tools to stem heavy redemptions by giving them discretion to impose a liquidity fee if a fund's weekly liquidity level falls below the required regulatory threshold and giving them discretion to suspend redemptions temporarily, i.e., to gate funds, under the same circumstances. These amendments will require all non-government money market funds to impose a liquidity fee if the fund's weekly liquidity level falls below a designated threshold, unless the fund's board determines that imposing such a fee is not in the best interests of the fund. GAO-14-859R

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