The Asset Management Group (AMG) of SIFMA provides comments to the Securities and Exchange Commission (SEC) on proposed amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, (the 1940 Act) to implement Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). Section 939A directs certain Federal agencies, including the SEC, to review and eliminate certain references to ratings in their regulations.  SIFMA AMG’s correspondence includes the following points:

• Rule 2a-7 forbids the reliance on credit ratings as an assessment of creditworthiness, therefore Section 939A of Dodd-Frank does not apply to Rule 2a-7;
• Credit ratings benefit shareholders by serving as a quality floor, which is different than the provisions in other regulations;
• Form N-MFP should not be altered because it is a disclosure form and is not required for quality assessment; and,
• If the commission determines that Section 939A requires removal of the references, then Congress should explore the possibility that additional credit analysis be mandated rather than the removal of ratings references.