SEC’s Division of Economic and Risk Analysis Press Release
March 24, 2014
On March 24, 2014 the staff of the Securities and Exchange Commission (SEC) made available data analyses pertaining
to money market fund reform. The analyses presented were carried out by the Division of Economic and Risk Analysis
(DERA) and examined four aspects of the June 5, 2013 proposed rule. These reports are accessible on the SEC’s
website:
1)
2)
3)
4)
Liquidity Cost During Crisis Periods;
Government Money Market Fund Exposure to Non-Government Securities;
Municipal Money Market Funds Exposure to Parents of Guarantors and
Demand and Supply of Safe Assets in the Economy
While the SEC’s Investment Management Division drafts official rule releases, DERA is a separate entity within the SEC
that is involved in a variety of activities, including policy-making, rule-making, enforcement and examination. Historically,
the Division of Investment Management has utilized DERA’s highly detailed analysis on specific subject matter in their rulemaking efforts.
The SEC commented that the DERA analyses have the potential to be informative for evaluating final rule amendments for
the regulation of money market fund reform. As a result, in order to achieve their stated goal of “preserving, as much as
possible, the benefits of money market funds for investors and the short-term financing market,” the SEC is asking the
public – including investors and the industry - to review and submit additional comments on the supplemental information
by April 23, 2014.
These analyses may supplement other information considered by the SEC in connection with the final rule amendments.
The SEC would then need to conduct a vote to approve the final rule proposal in order to proceed with implementation.
Proposed Rule Revisited
In general, the SEC is considering a proposal that would include two principal reforms: 1) prime institutional funds would be
required to transact at a floating net asset value (FNAV); or 2) money market funds would continue to transact at a stable
share price, but would be able to use liquidity fees and redemption gates in times of stress. The SEC is considering
whether these alternative reforms could be adopted alone or in combination.
SEC rulemaking process summarized:
1. Proposed Rule Approval
On June 5, 2013, all five SEC Commissioners approved a proposed rule and released it
publicly for comment.
2. Comment Period
The SEC established a Comment Period of 90 days, where the public provided
feedback on the proposed rule by September 17, 2013.
3. Comment Review and Final
Proposal Drafting*
4. Final Rule Release
5. Rule Implementation
Note SEC Commissioners subject to change.
*Current Phase
Following the Comment Period, the SEC considers public comments, and if it
determines to pursue a final rule, drafts the final proposal.

On March 24, 2014, the Commission released substantive information
pertaining to the proposed ruling for the public to review and option to
comment on by April 23, 2014. (See above for details)
The SEC would need three of five Commissioners to approve a final rule release. If
approved, the final rule would be released publicly.
In a final rule release, the SEC would specify an implementation timeline for any new
requirements. In the rule proposal released in June 2013 the SEC indicated that
implementation of the rule proposal could be staged for different requirements, from 9
months to 2 years from the date the rule is finally adopted.
An investment in a money market portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although a money market portfolio seeks to
preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in a
money market portfolio.
Additional Information
Securities and Exchange Commission:
http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370541253716
http://www.sec.gov/dera/Article/about.html
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Date of first use: April 11, 2014
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