The SIFMA Asset Management Group (“SIFMA AMG”) and the SIFMA Private Client Group submitted a joint comment letter to the SEC on four memoranda released by the SEC Division of Economic and Risk Analysis (“DERA”) regarding Money Market Fund Reforms. The four memoranda were: (i) Liquidity Cost during Crisis Periods (the “Liquidity Cost Memorandum”); (ii) Municipal Money Market Funds Exposure to Parents of Guarantors (the “Municipal MMF Memorandum”); (iii) Demand and Supply of Safe Assets in the Economy; and (iv) Government Money Market Fund Exposure to Non-Government Securities.
The comment letter focused on two issues: (i) if a liquidity charge were imposed on an investor making a withdrawal from a money market fund during a downturn, what should be the amount of the charge and (ii) what should be the portfolio diversification requirements?
Regarding the liquidity charge, the comment letter urged that any such charge be set at 1% of the value of redeemed assets (rather than 2%, as the SEC had proposed). The comment letter argued against any change in the current concentration rules.
See: SIFMA Comment Letter.