Money Market Fund Reform and Adminests to Form PF

The Asset Management Group of SIFMA (SIFMA AMG) and the SIFMA Private Client Group provide comments to the Securities and Exchange Commission (SEC) on memoranda prepared by the staff of the SEC Division of Economic and Risk Analysis (DERA) orelating to File Number S7-03-13, Release No. IC-30551, Money Market Fund Reform; Amendments to Form PF. The Memoranda are intended to be informative for evaluating proposed new and amended rules and forms relating to money market funds in the Release, including Rule 2a-7 under the Investment Company Act of 1940, as amended (Rule 2a-7).

The groups ask the SEC to consider the following relating to the Liquidity Cost Memorandum and the Municipal MMF Memorandum:

• If the Commission adopts a liquidity fee, we recommend that the default level of the fee be reduced from 2% to 1%. Data in the Liquidity Cost Memorandum support that a lower default level will effectively compensate money market funds for the cost of liquidity during market turmoil.
• The Commission should not expand the credit support diversification test to 100% of the assets of a money market fund portfolio, from the current 75%. That is, money market funds should continue to be permitted to have a 25% non-diversified basket (“25% basket”). The Municipal MMF Memorandum does not show that the removal of the 25% basket is necessary and does not adequately recognize the difficulties for municipal money market funds that would result from the elimination of the 25% basket.