PROPOSED AMENDMENT TO RULE 15C2-4 TO PERMIT TEMPORARY INVESTMENT OF OFFERING PROCEEDS IN MONEY MARKET FUNDS

June 9, 1992 TO: INSTITUTIONAL FUNDS COMMITTEE NO. 11-92 RE: PROPOSED AMENDMENT TO RULE 15c2-4 TO PERMIT TEMPORARY INVESTMENT OF OFFERING PROCEEDS IN MONEY MARKET FUNDS Attached for your review is a draft letter to the Division of Market Regulation requesting that the Division recommend to the Commission a proposed amendment to Rule 15c2-4 under the Securities Exchange Act of 1934 to permit broker-dealers to invest the proceeds of a non-firm commitment underwriting in shares of a money market mutual fund. Rule 15c2-4 sets forth requirements for the disposition of proceeds of a distribution of securities that is contingent upon the occurrence of some further event, during the period between the receipt of funds from investors and the occurence (or non-occurence, as the case may be) of the contingency. As currently in effect, the rule requires that a broker-dealer either (1) deposit such offering proceeds in a separate bank account, as agent or trustee for the investors, or (2) transmit the funds to a bank escrow agent, pending the occurence of the contingency. The attached draft letter proposes that Rule 15c2-4 be amended to permit investment of the offering proceeds in shares of a money market mutual fund, on the basis that this alternative would provide a convenient and appropriate means of fulfilling the purpose of the rule. If you have any questions or comments about the letter, please call me at (202) 955-3514 by Monday, June 29. Among other things, please consider whether the letter should suggest that only a money market fund that is not affiliated with the broker-dealer would be eligible. Frances M. Stadler Assistant Counsel Attachment