Alert August 12, 2014

Goodwin Procter Alert: Money Market Fund Reform – A Summary of Significant Changes

Goodwin Procter’s Investment Management Practice issued a client alert that provides an overview of the SEC’s recently adopted amendments to its rules governing money market funds (“MMFs”).  The client alert summarizes the various elements of the amendments, including (i) the requirement that institutional prime and institutional tax-exempt MMFs use a floating net asset value rather than being allowed to maintain a stable share price through use of the amortized cost method of valuation and/or the penny rounding method of pricing, (ii) the introduction of mechanisms for MMF boards of directors to impose liquidity fees and/or temporarily suspend redemptions, and (iii) stricter diversification requirements for MMF portfolios, enhanced MMF stress testing requirements, and additional reporting and disclosure requirements for MMFs.