• Temporary Money Market Portfolio Holdings Disclosure Requirements Implemented
  • October 28, 2009
  • Law Firm: Ropes & Gray LLP - Office
  • The Treasury Department's Money Market Guarantee Program (the “Guarantee Program”), ended on September 18, 2009 and on that day the SEC voted to approve a new interim final temporary Rule 30b1-6T. Under this rule, money market funds must submit to the Commission a schedule of portfolio holdings and related information when the fund’s market-based NAV (or “shadow price”) falls below $0.9975. Once this occurs, the fund’s portfolio holdings schedule must be submitted by the next business day, and thereafter on the last business day of each week (by the second business day of the following week) until the market-based NAV rises above $0.9975. All data submissions are confidential. Ropes & Gray has confirmed with the staff of the Division of Investment Management that a fund may include the value of any capital support agreements in its shadow pricing for purposes of the Rule.

    Rule 30b1-6T is, in essence, an extension of a similar requirement under the Guarantee Program which ended on the same day, though the new rule applies to all money market funds and not just participants in the Guarantee Program. The rule was issued with immediate effectiveness for an initial term through September 17, 2010. The SEC has requested comments on, among other issues, the data items required in the schedule and whether the $0.9975 level is the appropriate reporting trigger. Under existing rules the frequency with which shadow pricing is conducted is left to the discretion of the fund’s Board of Directors. Because Rule 30b1-6T does not purport to change these existing rules for funds with a market-based NAV above $0.9975, daily shadow pricing is not required.

    The SEC maintains that the new rule will facilitate continued industry monitoring, however, at any given time it is likely to provide the Commission with information on only a few funds. By contrast, the portfolio holdings reporting requirement proposed as part of the SEC’s money market reform initiative in June would mandate monthly reporting for all money market funds and so would appear to be better tailored to broad systemic monitoring.