SEC No-Action Letter Allowing Money Market Funds to Shadow Price Certain Securities Using Amortized Cost Expires January 12
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January 8, 2009
TO: ACCOUNTING/TREASURERS MEMBERS No. 3-09BOARD OF GOVERNORS No. 1-09
COMPLIANCE MEMBERS No. 3-09
END OF DAY PRICING FORUM No. 2-09
EQUITY MARKETS ADVISORY COMMITTEE No. 2-09
FIXED-INCOME ADVISORY COMMITTEE No. 1-09
INST. MONEY MARKET FUNDS ADVISORY COMMITTEE No. 1-09
INVESTMENT COMPANY DIRECTORS No. 1-09
MONEY MARKET FUNDS ADVISORY COMMITTEE No. 1-09
MUNICIPAL SECURITIES ADVISORY COMMITTEE No. 1-09
PRIMARY CONTACTS - MONEY MARKET FUNDS No. 1-09
SEC RULES MEMBERS No. 2-09
SMALL FUNDS MEMBERS No. 3-09
VARIABLE INSURANCE PRODUCTS ADVISORY COMMITTEE No. 1-09 RE: SEC NO-ACTION LETTER ALLOWING MONEY MARKET FUNDS TO SHADOW PRICE CERTAIN SECURITIES USING AMORTIZED COST EXPIRES JANUARY 12
As you know, the staff of the Securities and Exchange Commission’s Division of Investment Management issued a no-action letter to the Institute last fall stating that it would not recommend enforcement action to the Commission, under Section 2(a)(41) of the Investment Company Act of 1940 and Rules 2a-4 and 22c-1 thereunder, if a money market fund complies with Rule 2a-7 by “shadow pricing” certain of its portfolio securities by reference to their amortized cost value rather than using available market quotations. * Based on current market conditions, the SEC staff has determined not to extend that relief, which will expire on Monday, January 12, 2009. After that date, money market funds must shadow price all of their portfolio securities, regardless of the time of maturity, based on market factors and not their amortized cost value.
We, of course, will continue to monitor market conditions closely and work with the SEC staff if further relief is necessary.
Jane G. Heinrichs
Associate Counsel
endnotes
* See Investment Company Institute, SEC No-Action Letter (pub. avail. October 10, 2008), available on the SEC’s website at http://sec.gov/divisions/investment/noaction/2008/ici101008.htm.