The compliance date for new rules included in the SEC’s money market fund reforms is fast approaching. Among other things, the reforms include changes to stress-testing requirements, disclosure requirements, net asset value (NAV) calculations, and minimum liquidity thresholds.
In a recently published article, Money Market Mutual Funds: Stress Testing and the New Regulatory Requirements, professionals from NERA Economic Consulting offer practical insights into the implementation of the new stress- testing requirements. Through a series of hypothetical scenarios, NERA demonstrates implementation of the new requirements and addresses a number of issues that money market fund boards and advisers should consider when implementing the new stress-testing standards and assessing the results.
Recent SEC cases, such as a December 2014 ALJ opinion finding that an adviser to money market funds and the funds’ portfolio manager misled a fund’s board with respect to the fund’s risk exposure to credit, make clear that money market funds remain squarely in the SEC’s viewfinder. Advisers and fund boards should be aware of the money market fund regulatory environment, and proactive about ensuring that they are ready to implement the new regulatory requirements in the spring of 2016.
The complete article is available here.