Disclosure of Certain Money Market Fund Portfolio Holdings, 48376-48381 [E9-22900]
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Federal Register / Vol. 74, No. 183 / Wednesday, September 23, 2009 / Rules and Regulations
rule concerning Executive Order 12866
and the Regulatory Flexibility Act,
Executive Orders 12372, and the
Paperwork Reduction Act.
Further, for this action, the Office of
Management and Budget has waived its
review under Executive Order 12866.
List of Subjects in 9 CFR Part 77
Animal diseases, Bison, Cattle,
Reporting and recordkeeping
requirements, Transportation,
Tuberculosis.
PART 77—TUBERCULOSIS
Accordingly, we are adopting as a
final rule, without change, the interim
rule that amended 9 CFR part 77 and
that was published at 74 FR 12055–
12058 on March 23, 2009.
■
Done in Washington, DC, this 18th day of
September 2009.
Kevin Shea,
Acting Administrator, Animal and Plant
Health Inspection Service.
[FR Doc. E9–22960 Filed 9–22–09; 8:45 am]
BILLING CODE 3410–34–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Part 270
[Release No. IC–28903; File No. S7–20–09]
RIN 3235–AK33
Disclosure of Certain Money Market
Fund Portfolio Holdings
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AGENCY: Securities and Exchange
Commission.
ACTION: Interim final temporary rule;
request for comment.
SUMMARY: The Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
is adopting an interim final temporary
rule under the Investment Company Act
of 1940 to require a money market fund
to report its portfolio holdings and
valuation information to the
Commission under certain
circumstances. The new reporting
requirement is designed to provide
information substantially similar to that
submitted by certain money market
funds under the Temporary Guarantee
Program for Money Market Funds
established by the Department of the
Treasury (‘‘Treasury Department’’),
which will expire on September 18,
2009.
Effective Date: September 18,
2009 through September 17, 2010.
Comment Date: Comments should be
received on or before October 26, 2009.
DATES:
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Comments may be
submitted by any of the following
methods:
ADDRESSES:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/final.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number S7–20–09 on the subject line;
or
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow the
instructions for submitting comments.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number S7–20–09. This file number
should be included on the subject line
if e-mail is used. To help us process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s Internet Web site
(https://www.sec.gov/rules/final.shtml).
Comments are also available for public
inspection and copying in the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549, on official business days
between the hours of 10 a.m. and 3 p.m.
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
FOR FURTHER INFORMATION CONTACT: If
you have questions about the rule,
please contact one of the following
members of the staff in the Division of
Investment Management, at the
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–8549: Adam B. Glazer, Senior
Counsel, or Hunter Jones, Assistant
Director at (202) 551–6792; for technical
questions related to the submission of
portfolio information to the
Commission, in the Office of
Information Technology, Rick Heroux,
at (202) 551–8168.
SUPPLEMENTARY INFORMATION: The
Commission is adopting new rule 30b1–
6T under the Investment Company Act
of 1940 (‘‘Investment Company Act’’ or
‘‘Act’’) 1 as an interim final temporary
1 15 U.S.C. 80a. Unless otherwise noted, all
references to statutory sections are to the
Investment Company Act, and all references to
rules under the Investment Company Act, including
rule 2a–7, will be to Title 17, Part 270 of the Code
of Federal Regulations [17 CFR 270].
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rule. We are soliciting comments on all
aspects of the interim final temporary
rule. We will carefully consider the
comments that we receive and intend to
respond to them in a subsequent release.
I. Background
Money market funds are open-end
management investment companies that
invest in short-term obligations and
have a principal investment objective of
maintaining a net asset value of $1.00
per share.2 Since October 2008, most
money market funds have participated
in the Treasury Department’s
Temporary Guarantee Program for
Money Market Funds (‘‘Guarantee
Program’’), which has guaranteed the
$1.00 share value of accounts held by
investors as of September 19, 2008 in
participating money market funds.3 The
Guarantee Program was established to
help stabilize money market funds
following a period of substantial
redemptions that threatened the ability
of some money market funds to
maintain the $1.00 share value.4 The
program will expire on September 18,
2009.5
Money market funds participating in
the Guarantee Program have been
required, in certain circumstances, to
submit their portfolio schedules and
related information each week to the
Treasury Department and the
Commission.6 The Commission has
2 See generally Valuation of Debt Instruments and
Computation of Current Price Per Share by Certain
Open-End Investment Companies (Money Market
Funds), Investment Company Act Release No.
13380 (July 11, 1983) [48 FR 32555 (July 18, 1983)].
Most money market funds seek to maintain a stable
net asset value per share of $1.00, but a few seek
to maintain a stable net asset value per share of a
different amount, e.g., $10.00. For convenience,
throughout this release, the discussion will simply
refer to the stable net asset value of $1.00 per share.
3 Our staff estimates that approximately 79
percent of money market funds participated in the
Guarantee Program, and that the money market
funds that did not participate in the program were
mostly funds that invest predominately in U.S.
Treasury and U.S. Government securities.
4 See Press Release, U.S. Department of the
Treasury, Treasury Announces Guaranty Program
for Money Market Funds (Sept. 19, 2008), available
at https://www.treas.gov/press/releases/hp1147.htm.
5 See Press Release, U.S. Department of the
Treasury, Treasury Announces Extension of
Temporary Guarantee Program for Money Market
Funds (Nov. 24, 2008), available at https://
www.treas.gov/press/releases/hp1290.htm; Press
Release, U.S. Department of the Treasury, Treasury
Announces Extension of Temporary Guarantee
Program for Money Market Funds (Mar. 31, 2009),
available at https://www.treas.gov/press/releases/
tg76.htm.
6 See section 5(b) of the Guarantee Agreement that
money market funds participating in the Treasury’s
Guarantee Program were required to sign
(‘‘Guarantee Agreement’’), available at https://
www.treas.gov/offices/domestic-finance/keyinitiatives/money-market-docs/GuaranteeAgreement_form.pdf (requiring a fund to submit
reports when their market-based net asset value is
less than $.9975).
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found these reports very useful in
monitoring money market funds, and
we believe that continuing to receive
this information will further our
mission to protect investors. When the
program expires, however, money
market funds will no longer be required
to submit such portfolio information,
and we will not receive current
information about money market fund
holdings.
In June 2009, the Commission
proposed new rules and rule
amendments to reform the regulation of
money market funds.7 The proposal
included a new rule and a new form
N–MFP, on which money market funds
would report to the Commission
detailed information about their
portfolio holdings, which we would use
to monitor the funds.8 We proposed to
require that all money market funds
submit more detailed information than
we currently receive under the
Guarantee Program, and we proposed
that the information be filed in a format
that would permit us to create a
searchable database of money market
fund information.9 The proposed
requirement that money market funds
report detailed portfolio information to
the Commission was designed to
improve our ability to oversee those
funds.10
We have received more than 125
comments on the money market fund
amendments we proposed in June 2009.
Of the approximately 40 commenters
who addressed the proposals to require
the reporting of portfolio holdings to the
Commission, 33 generally supported
such reporting.11 Some commenters,
7 Money Market Fund Reform, Investment
Company Act Release No. 28807 (June 30, 2009) [74
FR 32688 (July 8, 2009)] (‘‘2009 Proposing
Release’’). The 2009 Proposing Release includes an
extensive discussion of the market developments
leading to the Commission’s proposals. See id. at
Section I.
8 Id. (proposing new rule 30b1–6 and Form
N–MFP).
9 Id. at Section II.F.2.
10 Id. at text preceding n.81.
11 See, e.g., American Institute of Certified Public
Accountants Comment Letter (Sept. 8, 2009);
Bankers Trust Company, N.A. Comment Letter
(Aug. 28, 2009); BlackRock Inc. Comment Letter
(Sept. 4, 2009). Five commenters who addressed the
reporting of portfolio holdings to the Commission
did not generally support or oppose the proposal.
One commenter expressed strong support for the
Commission’s efforts and offered specific comments
on the proposed reporting of portfolio securities to
´
the Commission. See Data Communique Comment
Letter (Sept. 8, 2009). Two commenters opposed the
reporting of portfolio holdings to the Commission.
See The Dreyfus Corporation Comment Letter (Sept.
8, 2009); Vera B. Lichtenberger Comment Letter
(Sept. 3, 2009). See also American Benefits Council
Comment Letter (Sept. 8, 2009) (expressing general
support for the Commission’s proposals); AARP
Comment Letter (Sept. 8, 2009) (expressing general
support for Commission’s efforts to step up
oversight of money market funds).
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however, expressed concerns about the
specific information required,12 the
timing of the disclosure,13 and our
intent to make the information publicly
available.14
We will continue to review these
comment letters, and any additional
comments we receive in response to our
additional request for comment in this
Release below. These comments will
help us to determine whether, and if so
how, to construct a permanent reporting
regime that best meets our regulatory
needs in protecting investors, while
imposing no more regulatory burdens
than are necessary. In the meantime,
however, because of the importance of
the information about money market
fund portfolios, we are adopting an
interim final temporary rule, rule 30b1–
6T, that requires the reporting of basic
securities portfolio information to the
Commission in certain limited
circumstances, as described below. The
interim final temporary rule is designed
to maintain our ability, as it currently
exists under the Guarantee Program, to
monitor money market funds while we
consider whether to adopt the
amendments we proposed in June 2009.
II. Discussion
A. Rule 30b1–6T
Rule 30(b)1–6T requires money
market funds to provide the
Commission weekly portfolio and
valuation information substantially
similar to what money market funds
participating in the Guarantee Program
provided to us and the Treasury
Department under the program, if their
market-based net asset value per share
was below $.9975. Each money market
fund that is required to report must
provide a portfolio schedule as of the
last business day of each week that
includes, with respect to the fund: (A)
The name of the money market fund; (B)
the fund’s SEC file number; (C) the net
asset value per share used to effect
shareholder transactions; (D) the most
recent market-based net asset value
(including the value of any capital
support agreement); (E) the most recent
market-based net asset value (excluding
12 See, e.g., Federated Investors, Inc. Comment
Letter (Sept. 8, 2009); Fidelity Investments
Comment Letter (Aug. 24, 2009); Fifth Third Asset
Management, Inc. Comment Letter (Sept. 8, 2009);
Investment Company Institute Comment Letter
(Sept. 8, 2009).
13 See, e.g., Investment Company Institute
Comment Letter (Sept. 8, 2009); T. Rowe Price
Associates, Inc. Comment Letter (Sept. 8, 2009); The
Vanguard Group, Inc. Comment Letter (Aug. 19,
2009).
14 See, e.g., BlackRock Inc. Comment Letter (Sept.
4, 2009); Federated Investors, Inc. Comment Letter
(Sept. 8, 2009); T. Rowe Price Associates, Inc.
Comment Letter (Sept. 8, 2009).
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48377
the value of any capital support
agreement); (F) the date as of which the
most recent market-based net asset
value was calculated; (G) the total assets
of the fund; (H) the total net assets of the
fund; and (I) the number of shares
outstanding. The portfolio schedule also
must include, with respect to each
security held: (A) The name of the
security; (B) CUSIP number (if any); (C)
principal amount; (D) maturity date; (E)
final maturity date, if different from the
maturity date as determined under rule
2a-7; (F) categorization of the security’s
status as a ‘‘First Tier Security,’’
‘‘Second Tier Security’’ or a security
that is no longer an ‘‘Eligible Security’’
under rule 2a–7; (G) the most recent
market-based price (including the value
of any capital support agreement), or
appropriate substitute for such price, in
which case the portfolio schedule or an
exhibit to it must describe with
reasonable specificity the appropriate
substitute; (H) the most recent marketbased price (excluding the value of any
capital support agreement), or
appropriate substitute for such price, in
which case the portfolio schedule or an
exhibit to it must describe with
reasonable specificity the appropriate
substitute; (I) the amortized cost value
of the security; and (J) in the case of a
tax-exempt security, whether there is a
demand feature.15
As was the case under the Guarantee
Program, only a money market fund
with market-based net asset value per
share (‘‘market-based NAV’’) below
$.9975 must report information under
the rule.16 Such a fund must notify the
Commission by electronic mail and
provide a portfolio schedule to the
Commission promptly, but in no event
later than the next business day.17
Subsequently, the fund must report its
portfolio schedule as of the last business
day of the week, and submit it no later
than the second day of the following
week, until the fund’s market-based
NAV at the end of the week is $.9975
or greater.18 This information will
15 See rule 30b1–6T(b)(3). Some items of
information that money market funds report under
the Guarantee Program are not included in rule
30b1–6T. These items, such as the identity of the
fund’s subadviser, are items to which we have
access through other means.
16 Rule 30b1–6T(a). In the Proposing Release, we
requested comment on whether we should also
require funds to provide us market-based portfolio
value information on a nonpublic basis. In addition,
we asked for comment on whether a certain price
level of NAV (e.g., $.9975) should trigger such
disclosure, and how frequently money market funds
should be required to provide this information (e.g.,
weekly or daily). See 2009 Proposing Release, supra
note 7, at text accompanying and following n.253.
17 Rule 30b1–6T(a)(1).
18 Rule 30b1–6T(a)(2).
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enable us to identify funds that present
a greater risk that they will be unable to
maintain their primary investment
objectives.
The portfolio information would be
provided to the Commission as an
attachment in Microsoft Excel format.19
Excel format is the format that money
market funds have been required to use
for submissions under the Guarantee
Program.20
The rule, by its terms, will expire on
September 17, 2010.25 Setting a
termination date of one year for the rule
will necessitate further Commission
action no later than the end of that
period if the Commission determines to
continue the same, or similar,
requirements contained in the
temporary rule.
B. Nonpublic Nature of Information
Reported
The information provided to the
Commission may be sent by secure
encrypted electronic mail 21 to the
address we have established for this
purpose.22 In light of the nature of the
information that will be provided to the
Commission under rule 30b1–6T and
the purposes for which the Commission
is requiring the information, we have
determined to maintain the
confidentiality of the information
submitted to the Commission,23 and the
rule states that the information will be
nonpublic to the extent permitted by
law.24
The Commission requests comment
on interim final temporary rule 30b1–
6T. We will carefully consider the
comments that we receive and intend to
respond to them in a subsequent release.
We may revise the rule in a number of
ways, including (i) making the rule
permanent, (ii) revising the
circumstances that trigger a reporting
obligation, (iii) revising the information
that a fund must report under the rule,
and (iv) revising the method of reporting
the information to the Commission.
We seek comment generally on all
aspects of the temporary rule, including
the following:
Expiration. Rule 30b1–6T is a
temporary rule and is set to expire on
September 17, 2010. Should we remove
the expiration provision of the rule and
make the rule permanent? Should we
extend the expiration date of the rule?
If so, for how long? Should we allow the
rule to expire?
Timing. The rule requires the
submission of portfolio and valuation
information to the Commission on a
weekly basis. Should funds be required
to provide the information more
frequently (e.g., daily) or less frequently
(e.g., monthly or biweekly)? The
information must be provided within
two business days after the end of the
week, and we understand that funds
that have submitted this information
under the Guarantee Program have not
encountered difficulties meeting the
two-day deadline. Has the deadline
imposed hardships in the past? Do
money market funds anticipate future
difficulties in meeting this deadline if
they become subject to the reporting
requirement? Should the rule allow a
longer delay in submitting the
information (e.g., three days or five
days)? Should it require a shorter delay
in submitting the information (e.g., one
day)?
Reporting Threshold. The rule
requires a money market fund to submit
portfolio and valuation information to
the Commission if its market-based
NAV declines below $.9975. Is this an
appropriate threshold to trigger
reporting? Should the threshold be
C. Effective Date and Expiration of the
Rule
Rule 30b1–6T will be effective as of
September 18, 2009, so that the
Commission will continue to receive the
information that it has received in the
past year under the Guarantee Program.
19 Rule
30b1–6T(b)(3).
1(q) of the Guarantee Agreement, supra
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20 Section
note 6.
21 The reports may be sent through secure
encrypted electronic mail by registering for an
account at the following URL: https://
web1.zixmail.net/s/login?b=sec. The Guarantee
Program similarly allows for submission of
encrypted information by electronic mail.
22 The address we have established is
mmfweeklyholdings@sec.gov. A money market fund
providing information under rule 30b1–6T should
not submit a confidential treatment request to the
Commission, but must label its submission to the
Commission as non-public.
23 In the 2009 Proposing Release, we requested
comment on whether portfolio holdings
information filed with the Commission on proposed
Form N–MFP should be submitted in nonpublic
reports to the Commission, and we continue to
consider comments on that rulemaking. See 2009
Proposing Release, supra note 7, at paragraph
following n.251 and at text accompanying and
following n.253.
24 See rule 30b1–6T(c). The Freedom of
Information Act (‘‘FOIA’’) provides at least two
pertinent exemptions under which the Commission
has authority to withhold certain information. FOIA
Exemption 4 provides an exemption for ‘‘trade
secrets and commercial or financial information
obtained from a person and privileged or
confidential.’’ 5 U.S.C. 552(b)(4). FOIA Exemption
8 provides an exemption for matters that are
‘‘contained in or related to examination, operating,
or condition reports prepared by, on behalf of, or
for the use of an agency responsible for the
regulation or supervision of financial institutions.’’
5 U.S.C. 552(b)(8).
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III. Request for Comment
25 Rule
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lower (e.g., $.9970) or higher (e.g.,
$.9980 or $.9985)?
Reporting Items. Should we omit any
of the disclosure requirements of rule
30b1–6T? If so, what information should
be omitted from the proposed
requirement, and why? Should we
require additional or alternative
information, such as the money market
fund’s client concentration levels, the
percentage of the issue held by the fund,
or last trade price and trade volume for
each security?
Regulatory Alternatives. We request
comment on feasible alternatives that
would minimize the reporting burdens
on money market funds.26 We also
request comment on the utility of the
reports to the Commission in relation to
the costs to money market funds of
providing the reports.27 In addition, we
request comment on whether funds
should be permitted to submit a hard
copy of their portfolio schedule
information to satisfy the initial or
weekly reporting requirement.
IV. Other Matters
The Administrative Procedure Act
(‘‘APA’’) generally requires an agency to
publish notice of a proposed rulemaking
in the Federal Register.28 This
requirement does not apply, however, if
the agency ‘‘for good cause finds * * *
that notice and public procedure
thereon are impracticable, unnecessary,
or contrary to the public interest.’’ 29
The APA also generally requires that an
agency publish an adopted rule in the
Federal Register 30 days before it
becomes effective.30 This requirement
also does not apply, however, if the
agency finds good cause for making the
rule effective sooner.31
For the reasons discussed in this
release, we believe that we have good
cause to act immediately to adopt this
rule on an interim final temporary basis.
We believe it is important for the
Commission to continue to receive
information from money market funds
in certain circumstances so that we can
monitor these funds. Adoption of the
rule with an immediate effectiveness
will minimize any disruption to the
normal reporting schedule of money
26 See section 30(c)(2)(A) of the Investment
Company Act (requiring Commission to consider
and seek public comment on feasible alternatives to
the required filing of information that minimize
reporting burdens on funds).
27 See section 30(c)(2)(B) of the Investment
Company Act (requiring Commission to consider
and seek public comment on the utility of
information, documents and reports to the
Commission in relation to the associated costs).
28 5 U.S.C. 553(b).
29 Id.
30 5 U.S.C. 553(d).
31 5 U.S.C. 553(d)(3).
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market funds that meet the reporting
threshold. Avoiding such disruption
should obviate the need for those funds
to stop and restart their reporting
procedures, and will allow us
uninterrupted access to the information
in the reports. This information will
permit us to identify funds that present
a greater risk that they will be unable to
maintain their primary investment
objectives.
The temporary rule takes effect on
September 18, 2009 and will expire on
September 17, 2010. For the reasons
discussed above, we have acted on an
interim final basis. We emphasize that
we are requesting comment on the
temporary rule. We will carefully
consider the comments we receive, and
we intend to respond to them in a
subsequent release.
We find that there is good cause to
have the temporary rule take effect on
September 18, 2009, and that notice and
public procedure in advance of
effectiveness of the rule are
impracticable, unnecessary, and
contrary to the public interest.
V. Paperwork Reduction Act Analysis
Interim final rule 30b1–6T under the
Investment Company Act contains a
‘‘collection of information’’ within the
meaning of the Paperwork Reduction
Act of 1995 (‘‘PRA’’).32 The title for the
new collection of information is ‘‘Rule
30b1–6T under the Investment
Company Act of 1940, Weekly portfolio
report for certain money market funds.’’
We submitted burden estimates to the
Office of Management and Budget
(‘‘OMB’’) for review and approval in
accordance with 44 U.S.C. 3507(j) and 5
CFR 1320.13. Separately, we submitted
the burden estimates to OMB for review
and approval in accordance with 44
U.S.C. 3507(d) and 5 CFR 1320.11. OMB
has approved the burden estimates
related to our adoption of rule 30b1–6T
on an emergency basis. Our new rule is
designed to improve our ability to
oversee money market funds with a
greater risk that they will be unable to
maintain their primary investment
objectives. An agency may not conduct
or sponsor, and a person is not required
to respond to, a collection of
information unless it displays a
currently valid control number.
Rule 30b1–6T requires a money
market fund whose market-based net
asset value is less than $.9975 to
electronically (i) notify the Commission
promptly and submit a portfolio
schedule within one business day, and
(ii) submit a portfolio schedule within
two business days after the end of each
32 44
U.S.C. 3501–3521.
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week until such time as the fund’s
market-based net asset value equals or
exceeds $.9975. The rule is intended to
facilitate our oversight of money market
funds. The respondents to rule 30b1–6T
are investment companies that are
regulated as money market funds under
rule 2a–7. Compliance with the rule is
mandatory for any money market fund
whose market-based NAV is less than
$.9975. Responses to the disclosure
requirements will be kept confidential.
We estimate, based on past experience
under the Guarantee Program, that at
any given time 10 money market funds
will be required by rule 30b1–6T to
provide weekly reports disclosing
certain information regarding the fund’s
portfolio holdings. We estimate that
money market funds would require an
average of approximately 6 burden
hours to compile and electronically
submit the initial required portfolio
holdings information, and an average of
approximately 4 burden hours in
subsequent reports.33 Based on these
estimates, we estimate the annual
burden will be 210 hours per money
market fund that is required to provide
the information.34 Based on an estimate
of 10 money market funds submitting
information under the rule, we estimate
that, in the aggregate, rule 30b1–6T
would result in 2100 hours, for all
money market funds required to submit
portfolio schedules.
VI. Cost Benefit Analysis
The Commission is sensitive to the
costs and benefits imposed by its rules.
We have identified certain costs and
benefits of rule 30b1–6T and request
comment on all aspects of this cost
benefit analysis, including identification
and assessment of any costs and benefits
not discussed in this analysis. Where
possible, we request that commenters
provide empirical data to support any
positions advanced.
48379
market funds. The rule would also
improve the efficiency and effectiveness
of the Commission’s oversight by
providing useful information about
money market funds that report under
the rule, and by enabling the staff to
manage and analyze money market fund
portfolio information more quickly and
at a lower cost than is possible without
electronic submissions of portfolio
schedules.
B. Costs
Rule 30b1–6T will impose some costs
on funds. For the purposes of the PRA,
we estimated that the rule will result in
an increase of 2100 burden hours per
year. We estimate that these burden
hours will cost a total of $590,100.35 We
do not believe that rule 30b1–6T will
impose other significant costs,
especially given the nonpublic nature of
the reports required under the rule.
In the 2009 Proposing Release, we
requested comment on the costs and
benefits of requiring money market
funds to report certain portfolio
holdings information to the
Commission.36 Commenters generally
supported the proposed reporting
obligation, but some expressed concerns
about the costs associated with specific
disclosure items, the timing and
frequency of the reports (particularly in
view of the amount of disclosure
required), and the public availability of
the reports.37 We believe that these
concerns are not applicable to rule
30b1–6T because the rule’s reporting
requirement will be triggered only on
the relatively rare occasion that a fund’s
net asset value fell below $.9975. In
addition, the reports themselves will
require less information and will remain
nonpublic.
A. Benefits
We are adopting rule 30b1–6T to
enable the Commission staff to continue
to have effective oversight of money
C. Request for Comment
We request comment on all aspects of
this cost-benefit analysis. Commenters
should address in particular whether
rule 30b1–6T will generate the
anticipated benefits or impose any other
costs on money market funds or other
market participants. We also request
33 We understand that the required information is
currently maintained by money market funds
pursuant to other regulatory requirements or in the
ordinary course of business. Accordingly, for the
purposes of our analysis, we do not ascribe any
time to gathering the required information.
34 Because one report is required each week, a
fund would submit 52 reports in one year. The first
report would require 6 hours and subsequent
reports would require 4 hours each. The difference
between the hours is due to the fact that funds
generally would not incur the additional start-up
time applicable to the first report. The annual
burden of the reporting requirement would be 210
hours (1 report × 6 hours = 6 hours, 51 reports ×
4 hours = 204 hours, and 6 hours + 204 hours =
210 hours).
35 This estimate is based on the following
calculation: 2100 hours × $281/hour (senior
database administrator) = $590,100. This hourly
wage estimate is from the Securities Industry and
Financial Markets Association Report on
Management & Professional Salaries Data (Sept.
2008), modified to account for an 1800-hour workyear and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
36 See 2009 Proposing Release, supra note 7, at
Section V.
37 See, e.g., Committee of Annuity Insurers
´
Comment Letter (Sept. 8, 2009); Data Communique
Comment Letter (Sept. 8, 2009); The Dreyfus
Corporation Comment Letter (Sept. 8, 2009);
Fidelity Investments Comment Letter (Aug. 24,
2009).
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comment as to any costs or benefits
associated with rule 30b1–6T that we
may not have considered here,
including whether the rule will have a
disproportionate effect on any particular
types of fund complexes. Commenters
are specifically invited to share
quantified costs and benefits.
VII. Consideration of Promotion of
Efficiency, Competition, and Capital
Formation
Section 2(c) of the Investment
Company Act requires the Commission,
when engaging in rulemaking that
requires it to consider or determine
whether an action is consistent with the
public interest, to consider, in addition
to the protection of investors, whether
the action will promote efficiency,
competition, and capital formation.38
We requested comment on whether the
proposed reporting requirement, if
adopted, would promote efficiency,
competition, or capital formation. One
commenter on the 2009 Proposing
Release asserted that the extensive
reporting requirements under proposed
rule 30b1–6 would have an adverse
effect on competition for sub-advised
funds.39 As noted above, however, rule
30b1–6T requires less disclosure than
rule 30b1–6, which we are continuing to
consider. In addition, although rule
30b1–6T requires more frequent (i.e.,
weekly) disclosure, it applies to far
fewer funds, because only funds whose
market-based net asset value is less than
$.9975 would be required to submit
reports. Thus, we believe that the
concerns expressed by the commenter
are less applicable to rule 30b1–6T.
Rule 30b1–6T is intended to facilitate
oversight of money market funds that
present a greater risk that they will be
unable to maintain their primary
investment objectives. As noted above,
the nonpublic reports are designed to
improve the efficiency and effectiveness
of the Commission’s oversight of such
money market funds, which may also
provide reassurance to investors, which
may in turn promote capital formation.
We do not believe that the rule will
have any effect on competition.
mstockstill on DSKH9S0YB1PROD with RULES
38 15
U.S.C. 80a–2(c).
of Annuity Insurers Comment Letter
(Sept. 8, 2009) (‘‘Some of these Committee members
believe that preparation of Form N–MFP on a
monthly basis would place an undue burden on
sub-advised underlying money market funds. This
is because a number of the information items
required by proposed Form N–MFP require
information that typically is in the possession of the
sub-adviser that actually manages the portfolio.’’).
39 Committee
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Jkt 217001
VIII. Regulatory Flexibility Act
Certification
Section 3(a) of the Regulatory
Flexibility Act of 1980 (‘‘RFA’’) 40
requires the Commission to undertake
an initial regulatory flexibility analysis
of the effect of its rules on small entities
unless the Commission certifies that the
rules do not have a significant economic
impact on a substantial number of small
entities.41 Pursuant to section 605(b) of
the RFA, the Commission hereby
certifies that Investment Company Act
rule 30b1–6T does not have a significant
impact on a substantial number of small
entities.42
Rule 0–10 of the Investment Company
Act defines a ‘‘small entity’’ for
purposes of the Act as an investment
company that, together with other
investment companies in the same
group of related investment companies,
has net assets of $50 million or less as
of the end of its most recent fiscal year.
Rule 30b1–6T applies only to money
market funds, and none of these funds
meet the definition of a small entity
under the Act.43
We solicit comment on the
certification. Commenters are asked to
describe the nature of any impact on
small entities and provide any empirical
data.
IX. Statutory Authority
The Commission is adopting new rule
30b1–6T pursuant to authority set forth
in Sections 8(b), 30(b), 31(a), and 38(a)
of the Investment Company Act [15
U.S.C. 80a–8(b), 80a–29(b), 80a–30(a),
and 80a–37(a)].
List of Subjects in 17 CFR Part 270
Investment companies, Reporting and
recordkeeping requirements, Securities.
Text of Rule
For reasons set out in the preamble,
Title 17, Chapter II of the Code of
Federal Regulations is amended as
follows:
■
40 5
U.S.C. 603(a).
U.S.C. 605(b).
42 Although the requirements of the RFA do not
apply to rules adopted under the APA’s ‘‘good
cause’’ exception, see 5 U.S.C. 601(2) (defining
‘‘rule’’ and notice requirement under the APA), we
have nevertheless provided this certification.
43 We note that we included a certification under
the RFA in the 2009 Proposing Release on the
grounds that none of the money market funds met
the definition of a small entity under the Act, and
we encouraged written comment regarding this
certification. See 2009 Proposing Release, supra
note 7, at Section VII. No commenters on that
rulemaking have addressed the Regulatory
Flexibility Act certification.
41 5
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PART 270—RULES AND
REGULATIONS, INVESTMENT
COMPANY ACT OF 1940
1. The authority citation for Part 270
continues to read, in part, as follows:
■
Authority: 15 U.S.C. 80a–1 et seq., 80a–
34(d), 80a–37, and 80a–39, unless otherwise
noted.
*
*
*
*
*
2. Section 270.30b1–6T is added to
read as follows:
■
§ 270.30b1–6T Weekly portfolio report for
certain money market funds.
(a) Notice and portfolio reports. If the
market-based NAV of a money market
fund on any business day (‘‘report
date’’) is less than 99.75 percent of the
fund’s stable net asset value per share or
stable price per share pursuant to
§ 270.2a–7(c)(1) (‘‘stable NAV’’), the
fund must, by electronic mail sent to the
electronic address
mmfweeklyholdings@sec.gov:
(1) Notify the Commission that its
NAV is less than 99.75 percent of its
stable NAV, and provide the
Commission with a portfolio schedule
as of the report date, promptly but in no
event later than the next business day
after the report date (unless the fund is
currently submitting reports pursuant to
this section); and
(2) Provide the Commission a
portfolio schedule as of the last business
day of each week, no later than the
second business day of the following
week, until the fund’s market-based
NAV as of such day is 99.75 percent of
its stable NAV or greater.
(b) Definitions. For purposes of this
section:
(1) Market-based NAV means a money
market fund’s net asset value per share
calculated using available market
quotations or an appropriate substitute
approved by the fund’s board of
directors as specified in the procedures
that the fund has adopted in accordance
with § 270.2a–7(c)(7) or, if the fund does
not value securities using the amortized
cost method, the fund’s current net asset
value per share calculated in accordance
with § 270.2a–4 (without regard to
§ 270.2a–7).
(2) Money market fund means an
open-end management investment
company or series thereof that is
registered under the Investment
Company Act and is regulated as a
money market fund under § 270.2a–7.
(3) Portfolio schedule means a
document prepared in Microsoft Excel
format that contains the following
information:
(i) With respect to each money market
fund and class thereof,
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Federal Register / Vol. 74, No. 183 / Wednesday, September 23, 2009 / Rules and Regulations
(A) Name of the money market fund
and class;
(B) SEC file number of the money
market fund;
(C) Net asset value per share used to
effect shareholder transactions;
(D) Most recent market-based net asset
value (including the value of any capital
support agreement);
(E) Most recent market-based net asset
value (excluding the value of any capital
support agreement);
(F) Date as of which the most recent
market-based net asset value was
calculated;
(G) Total assets of the fund;
(H) Total net assets of the fund; and
(I) Number of shares outstanding; and
(ii) With respect to each security held
by the money market fund:
(A) Name of the security;
(B) CUSIP number (if any);
(C) Principal amount;
(D) Maturity date as determined under
§ 270.2a–7;
(E) Final maturity date, if different
from the maturity date as determined
under § 270.2a–7;
(F) Categorization of the security’s
status as a ‘‘First Tier Security,’’
‘‘Second Tier Security’’ or a security
that is no longer an ‘‘Eligible Security’’
under § 270.2a–7;
(G) The most recent market-based
price (including the value of any capital
support agreement), or appropriate
substitute for such price, in which case
the portfolio schedule or an exhibit to
it must describe with reasonable
specificity the appropriate substitute;
(H) The most recent market-based
price (excluding the value of any capital
support agreement), or appropriate
substitute for such price, in which case
the portfolio schedule or an exhibit to
it must describe with reasonable
specificity the appropriate substitute;
(I) The amortized cost value; and
(J) In the case of a tax-exempt
security, whether there is a demand
feature, as defined in § 270.2a–7(a)(8).
(c) Nonpublic information.
Information provided to the
Commission pursuant to this section
shall be nonpublic to the extent
permitted by law.
(d) Expiration. This section will
expire on September 17, 2010.
By the Commission.
Dated: September 18, 2009
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–22900 Filed 9–18–09; 4:15 pm]
BILLING CODE 8010–01–P
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16:39 Sep 22, 2009
Jkt 217001
SOCIAL SECURITY ADMINISTRATION
20 CFR Parts 404 and 416
[Docket No. SSA–2008–0030]
RIN 0960–AG82
Authorization of Representative Fees
Social Security Administration.
Final rule.
AGENCY:
ACTION:
SUMMARY: We are revising our rules to
allow representatives, in certain
instances, to charge and receive a fee
from third-party entities without
requiring our authorization. We are also
eliminating the requirement that we
authorize fees for legal guardians or
court-appointed representatives who
represent claimants before us if a court
has already authorized the fees. We are
revising our rules to reflect changes in
representatives’ business practices and
in the ways claimants obtain
representation, and to improve the
efficiency of our representative fee
process.
DATES: This final rule is effective on
October 23, 2009.
FOR FURTHER INFORMATION CONTACT:
Joann S. Anderson, Office of Income
Security Programs, Social Security
Administration, 6401 Security
Boulevard, Baltimore, MD 21235–6401,
(410) 965–6716. For information on
eligibility or filing for benefits, call our
national toll-free number, 1–800–772–
1213 or TTY 1–800–325–0778, or visit
our Internet site, Social Security Online,
at https://www.socialsecurity.gov.
SUPPLEMENTARY INFORMATION:
Electronic Version
The electronic file of this document is
available on the date of publication in
the Federal Register at https://
www.gpoaccess.gov/fr/.
Explanation of Changes
Authority
We may issue regulations to
administer the Social Security Act (Act).
42 U.S.C. 405(a), 902(a)(5), and
1383(d)(1). We also have authority to
issue regulations allowing attorneys and
non-attorneys to represent claimants
before us and to set the maximum fees
for those services. 42 U.S.C. 406(a)(1)
and 1383(d)(2). Based on this authority,
we are revising our current regulations
on fees paid to claimant representatives
found in part 404 subpart R and part
416 subpart O.
Background
Generally, representatives must obtain
our authorization before charging or
PO 00000
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48381
receiving a fee for representing
claimants before us. 20 CFR 404.1720
and 416.1520. We also prohibit
representatives from charging or
receiving fees that are more than the
amount we authorize regardless of
whether the fee is charged to, or
received from, the claimants or someone
else. 20 CFR 404.1720(b)(3) and
416.1520(b)(3). However, if certain
criteria are met, we do not need to
authorize a fee if a nonprofit
organization or a government agency
pays the fee out of funds provided or
administered by a government entity.
Social Security Ruling (SSR) 85–3.
Changes
This final rule allows representatives,
in certain cases, to be paid fees for
representing claimants before us
without requiring our authorization.
The primary reason that we set
maximum fees is to protect claimants
and auxiliary beneficiaries.
Nevertheless, when certain third parties
are responsible for paying the
representative for his or her services,
there is no risk that the claimant or
auxiliary beneficiaries will be charged
an unreasonable fee. Third-party
entities, such as insurance companies,
often provide representation to
claimants and pay the representatives’
fees at no cost to the claimants or
auxiliary beneficiaries. We do not
believe that we need to authorize fee
arrangements between representatives
and third-party entities if claimants and
auxiliary beneficiaries are not
responsible for paying fees or expenses
directly or indirectly.
Similarly, there is no reason to require
legal guardians or court-appointed
representatives to obtain our
authorization for their fees if a court has
already authorized the fees. In our
experience, we have found courtauthorized fees reasonable. Before it
authorizes a fee, a court considers an
individual’s best interests when it
reviews and approves a legal guardian’s
or representative’s accounting.
Therefore, when a court authorizes a
fee, we do not need to duplicate the
court’s analysis.
In the notice of proposed rulemaking
(NPRM) that we published on August
26, 2008, we stated that we did not need
to authorize fees if ‘‘a business entity
independent of your representative’’
paid the fees. 73 FR 50260. However, we
did not define that phrase in the NPRM.
For clarity and in response to public
comments, we are using only the term
‘‘entity’’ and are defining ‘‘entity’’ to
include ‘‘any business, firm, or other
association, including but not limited to
partnerships, corporations, for-profit
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]]>Agencies
[Federal Register Volume 74, Number 183 (Wednesday, September 23, 2009)]
[Rules and Regulations]
[Pages 48376-48381]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22900]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 270
[Release No. IC-28903; File No. S7-20-09]
RIN 3235-AK33
Disclosure of Certain Money Market Fund Portfolio Holdings
AGENCY: Securities and Exchange Commission.
ACTION: Interim final temporary rule; request for comment.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission (``Commission'' or
``SEC'') is adopting an interim final temporary rule under the
Investment Company Act of 1940 to require a money market fund to report
its portfolio holdings and valuation information to the Commission
under certain circumstances. The new reporting requirement is designed
to provide information substantially similar to that submitted by
certain money market funds under the Temporary Guarantee Program for
Money Market Funds established by the Department of the Treasury
(``Treasury Department''), which will expire on September 18, 2009.
DATES: Effective Date: September 18, 2009 through September 17, 2010.
Comment Date: Comments should be received on or before October 26,
2009.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/final.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number S7-20-09 on the subject line; or
Use the Federal eRulemaking Portal (https://www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number S7-20-09. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (https://www.sec.gov/rules/final.shtml). Comments are
also available for public inspection and copying in the Commission's
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on
official business days between the hours of 10 a.m. and 3 p.m. All
comments received will be posted without change; we do not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: If you have questions about the rule,
please contact one of the following members of the staff in the
Division of Investment Management, at the Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-8549: Adam B.
Glazer, Senior Counsel, or Hunter Jones, Assistant Director at (202)
551-6792; for technical questions related to the submission of
portfolio information to the Commission, in the Office of Information
Technology, Rick Heroux, at (202) 551-8168.
SUPPLEMENTARY INFORMATION: The Commission is adopting new rule 30b1-6T
under the Investment Company Act of 1940 (``Investment Company Act'' or
``Act'') \1\ as an interim final temporary rule. We are soliciting
comments on all aspects of the interim final temporary rule. We will
carefully consider the comments that we receive and intend to respond
to them in a subsequent release.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a. Unless otherwise noted, all references to
statutory sections are to the Investment Company Act, and all
references to rules under the Investment Company Act, including rule
2a-7, will be to Title 17, Part 270 of the Code of Federal
Regulations [17 CFR 270].
---------------------------------------------------------------------------
I. Background
Money market funds are open-end management investment companies
that invest in short-term obligations and have a principal investment
objective of maintaining a net asset value of $1.00 per share.\2\ Since
October 2008, most money market funds have participated in the Treasury
Department's Temporary Guarantee Program for Money Market Funds
(``Guarantee Program''), which has guaranteed the $1.00 share value of
accounts held by investors as of September 19, 2008 in participating
money market funds.\3\ The Guarantee Program was established to help
stabilize money market funds following a period of substantial
redemptions that threatened the ability of some money market funds to
maintain the $1.00 share value.\4\ The program will expire on September
18, 2009.\5\
---------------------------------------------------------------------------
\2\ See generally Valuation of Debt Instruments and Computation
of Current Price Per Share by Certain Open-End Investment Companies
(Money Market Funds), Investment Company Act Release No. 13380 (July
11, 1983) [48 FR 32555 (July 18, 1983)]. Most money market funds
seek to maintain a stable net asset value per share of $1.00, but a
few seek to maintain a stable net asset value per share of a
different amount, e.g., $10.00. For convenience, throughout this
release, the discussion will simply refer to the stable net asset
value of $1.00 per share.
\3\ Our staff estimates that approximately 79 percent of money
market funds participated in the Guarantee Program, and that the
money market funds that did not participate in the program were
mostly funds that invest predominately in U.S. Treasury and U.S.
Government securities.
\4\ See Press Release, U.S. Department of the Treasury, Treasury
Announces Guaranty Program for Money Market Funds (Sept. 19, 2008),
available at https://www.treas.gov/press/releases/hp1147.htm.
\5\ See Press Release, U.S. Department of the Treasury, Treasury
Announces Extension of Temporary Guarantee Program for Money Market
Funds (Nov. 24, 2008), available at https://www.treas.gov/press/releases/hp1290.htm; Press Release, U.S. Department of the Treasury,
Treasury Announces Extension of Temporary Guarantee Program for
Money Market Funds (Mar. 31, 2009), available at https://www.treas.gov/press/releases/tg76.htm.
---------------------------------------------------------------------------
Money market funds participating in the Guarantee Program have been
required, in certain circumstances, to submit their portfolio schedules
and related information each week to the Treasury Department and the
Commission.\6\ The Commission has
[[Page 48377]]
found these reports very useful in monitoring money market funds, and
we believe that continuing to receive this information will further our
mission to protect investors. When the program expires, however, money
market funds will no longer be required to submit such portfolio
information, and we will not receive current information about money
market fund holdings.
---------------------------------------------------------------------------
\6\ See section 5(b) of the Guarantee Agreement that money
market funds participating in the Treasury's Guarantee Program were
required to sign (``Guarantee Agreement''), available at https://www.treas.gov/offices/domestic-finance/key-initiatives/money-market-docs/Guarantee-Agreement_form.pdf (requiring a fund to submit
reports when their market-based net asset value is less than
$.9975).
---------------------------------------------------------------------------
In June 2009, the Commission proposed new rules and rule amendments
to reform the regulation of money market funds.\7\ The proposal
included a new rule and a new form N-MFP, on which money market funds
would report to the Commission detailed information about their
portfolio holdings, which we would use to monitor the funds.\8\ We
proposed to require that all money market funds submit more detailed
information than we currently receive under the Guarantee Program, and
we proposed that the information be filed in a format that would permit
us to create a searchable database of money market fund information.\9\
The proposed requirement that money market funds report detailed
portfolio information to the Commission was designed to improve our
ability to oversee those funds.\10\
---------------------------------------------------------------------------
\7\ Money Market Fund Reform, Investment Company Act Release No.
28807 (June 30, 2009) [74 FR 32688 (July 8, 2009)] (``2009 Proposing
Release''). The 2009 Proposing Release includes an extensive
discussion of the market developments leading to the Commission's
proposals. See id. at Section I.
\8\ Id. (proposing new rule 30b1-6 and Form N-MFP).
\9\ Id. at Section II.F.2.
\10\ Id. at text preceding n.81.
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We have received more than 125 comments on the money market fund
amendments we proposed in June 2009. Of the approximately 40 commenters
who addressed the proposals to require the reporting of portfolio
holdings to the Commission, 33 generally supported such reporting.\11\
Some commenters, however, expressed concerns about the specific
information required,\12\ the timing of the disclosure,\13\ and our
intent to make the information publicly available.\14\
---------------------------------------------------------------------------
\11\ See, e.g., American Institute of Certified Public
Accountants Comment Letter (Sept. 8, 2009); Bankers Trust Company,
N.A. Comment Letter (Aug. 28, 2009); BlackRock Inc. Comment Letter
(Sept. 4, 2009). Five commenters who addressed the reporting of
portfolio holdings to the Commission did not generally support or
oppose the proposal. One commenter expressed strong support for the
Commission's efforts and offered specific comments on the proposed
reporting of portfolio securities to the Commission. See Data
Communiqu[eacute] Comment Letter (Sept. 8, 2009). Two commenters
opposed the reporting of portfolio holdings to the Commission. See
The Dreyfus Corporation Comment Letter (Sept. 8, 2009); Vera B.
Lichtenberger Comment Letter (Sept. 3, 2009). See also American
Benefits Council Comment Letter (Sept. 8, 2009) (expressing general
support for the Commission's proposals); AARP Comment Letter (Sept.
8, 2009) (expressing general support for Commission's efforts to
step up oversight of money market funds).
\12\ See, e.g., Federated Investors, Inc. Comment Letter (Sept.
8, 2009); Fidelity Investments Comment Letter (Aug. 24, 2009); Fifth
Third Asset Management, Inc. Comment Letter (Sept. 8, 2009);
Investment Company Institute Comment Letter (Sept. 8, 2009).
\13\ See, e.g., Investment Company Institute Comment Letter
(Sept. 8, 2009); T. Rowe Price Associates, Inc. Comment Letter
(Sept. 8, 2009); The Vanguard Group, Inc. Comment Letter (Aug. 19,
2009).
\14\ See, e.g., BlackRock Inc. Comment Letter (Sept. 4, 2009);
Federated Investors, Inc. Comment Letter (Sept. 8, 2009); T. Rowe
Price Associates, Inc. Comment Letter (Sept. 8, 2009).
---------------------------------------------------------------------------
We will continue to review these comment letters, and any
additional comments we receive in response to our additional request
for comment in this Release below. These comments will help us to
determine whether, and if so how, to construct a permanent reporting
regime that best meets our regulatory needs in protecting investors,
while imposing no more regulatory burdens than are necessary. In the
meantime, however, because of the importance of the information about
money market fund portfolios, we are adopting an interim final
temporary rule, rule 30b1-6T, that requires the reporting of basic
securities portfolio information to the Commission in certain limited
circumstances, as described below. The interim final temporary rule is
designed to maintain our ability, as it currently exists under the
Guarantee Program, to monitor money market funds while we consider
whether to adopt the amendments we proposed in June 2009.
II. Discussion
A. Rule 30b1-6T
Rule 30(b)1-6T requires money market funds to provide the
Commission weekly portfolio and valuation information substantially
similar to what money market funds participating in the Guarantee
Program provided to us and the Treasury Department under the program,
if their market-based net asset value per share was below $.9975. Each
money market fund that is required to report must provide a portfolio
schedule as of the last business day of each week that includes, with
respect to the fund: (A) The name of the money market fund; (B) the
fund's SEC file number; (C) the net asset value per share used to
effect shareholder transactions; (D) the most recent market-based net
asset value (including the value of any capital support agreement); (E)
the most recent market-based net asset value (excluding the value of
any capital support agreement); (F) the date as of which the most
recent market-based net asset value was calculated; (G) the total
assets of the fund; (H) the total net assets of the fund; and (I) the
number of shares outstanding. The portfolio schedule also must include,
with respect to each security held: (A) The name of the security; (B)
CUSIP number (if any); (C) principal amount; (D) maturity date; (E)
final maturity date, if different from the maturity date as determined
under rule 2a-7; (F) categorization of the security's status as a
``First Tier Security,'' ``Second Tier Security'' or a security that is
no longer an ``Eligible Security'' under rule 2a-7; (G) the most recent
market-based price (including the value of any capital support
agreement), or appropriate substitute for such price, in which case the
portfolio schedule or an exhibit to it must describe with reasonable
specificity the appropriate substitute; (H) the most recent market-
based price (excluding the value of any capital support agreement), or
appropriate substitute for such price, in which case the portfolio
schedule or an exhibit to it must describe with reasonable specificity
the appropriate substitute; (I) the amortized cost value of the
security; and (J) in the case of a tax-exempt security, whether there
is a demand feature.\15\
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\15\ See rule 30b1-6T(b)(3). Some items of information that
money market funds report under the Guarantee Program are not
included in rule 30b1-6T. These items, such as the identity of the
fund's subadviser, are items to which we have access through other
means.
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As was the case under the Guarantee Program, only a money market
fund with market-based net asset value per share (``market-based NAV'')
below $.9975 must report information under the rule.\16\ Such a fund
must notify the Commission by electronic mail and provide a portfolio
schedule to the Commission promptly, but in no event later than the
next business day.\17\ Subsequently, the fund must report its portfolio
schedule as of the last business day of the week, and submit it no
later than the second day of the following week, until the fund's
market-based NAV at the end of the week is $.9975 or greater.\18\ This
information will
[[Page 48378]]
enable us to identify funds that present a greater risk that they will
be unable to maintain their primary investment objectives.
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\16\ Rule 30b1-6T(a). In the Proposing Release, we requested
comment on whether we should also require funds to provide us
market-based portfolio value information on a nonpublic basis. In
addition, we asked for comment on whether a certain price level of
NAV (e.g., $.9975) should trigger such disclosure, and how
frequently money market funds should be required to provide this
information (e.g., weekly or daily). See 2009 Proposing Release,
supra note 7, at text accompanying and following n.253.
\17\ Rule 30b1-6T(a)(1).
\18\ Rule 30b1-6T(a)(2).
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The portfolio information would be provided to the Commission as an
attachment in Microsoft Excel format.\19\ Excel format is the format
that money market funds have been required to use for submissions under
the Guarantee Program.\20\
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\19\ Rule 30b1-6T(b)(3).
\20\ Section 1(q) of the Guarantee Agreement, supra note 6.
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B. Nonpublic Nature of Information Reported
The information provided to the Commission may be sent by secure
encrypted electronic mail \21\ to the address we have established for
this purpose.\22\ In light of the nature of the information that will
be provided to the Commission under rule 30b1-6T and the purposes for
which the Commission is requiring the information, we have determined
to maintain the confidentiality of the information submitted to the
Commission,\23\ and the rule states that the information will be
nonpublic to the extent permitted by law.\24\
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\21\ The reports may be sent through secure encrypted electronic
mail by registering for an account at the following URL: https://web1.zixmail.net/s/login?b=sec. The Guarantee Program similarly
allows for submission of encrypted information by electronic mail.
\22\ The address we have established is
mmfweeklyholdings@sec.gov. A money market fund providing information
under rule 30b1-6T should not submit a confidential treatment
request to the Commission, but must label its submission to the
Commission as non-public.
\23\ In the 2009 Proposing Release, we requested comment on
whether portfolio holdings information filed with the Commission on
proposed Form N-MFP should be submitted in nonpublic reports to the
Commission, and we continue to consider comments on that rulemaking.
See 2009 Proposing Release, supra note 7, at paragraph following
n.251 and at text accompanying and following n.253.
\24\ See rule 30b1-6T(c). The Freedom of Information Act
(``FOIA'') provides at least two pertinent exemptions under which
the Commission has authority to withhold certain information. FOIA
Exemption 4 provides an exemption for ``trade secrets and commercial
or financial information obtained from a person and privileged or
confidential.'' 5 U.S.C. 552(b)(4). FOIA Exemption 8 provides an
exemption for matters that are ``contained in or related to
examination, operating, or condition reports prepared by, on behalf
of, or for the use of an agency responsible for the regulation or
supervision of financial institutions.'' 5 U.S.C. 552(b)(8).
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C. Effective Date and Expiration of the Rule
Rule 30b1-6T will be effective as of September 18, 2009, so that
the Commission will continue to receive the information that it has
received in the past year under the Guarantee Program. The rule, by its
terms, will expire on September 17, 2010.\25\ Setting a termination
date of one year for the rule will necessitate further Commission
action no later than the end of that period if the Commission
determines to continue the same, or similar, requirements contained in
the temporary rule.
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\25\ Rule 30b1-6T(d).
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III. Request for Comment
The Commission requests comment on interim final temporary rule
30b1-6T. We will carefully consider the comments that we receive and
intend to respond to them in a subsequent release. We may revise the
rule in a number of ways, including (i) making the rule permanent, (ii)
revising the circumstances that trigger a reporting obligation, (iii)
revising the information that a fund must report under the rule, and
(iv) revising the method of reporting the information to the
Commission.
We seek comment generally on all aspects of the temporary rule,
including the following:
Expiration. Rule 30b1-6T is a temporary rule and is set to expire
on September 17, 2010. Should we remove the expiration provision of the
rule and make the rule permanent? Should we extend the expiration date
of the rule? If so, for how long? Should we allow the rule to expire?
Timing. The rule requires the submission of portfolio and valuation
information to the Commission on a weekly basis. Should funds be
required to provide the information more frequently (e.g., daily) or
less frequently (e.g., monthly or biweekly)? The information must be
provided within two business days after the end of the week, and we
understand that funds that have submitted this information under the
Guarantee Program have not encountered difficulties meeting the two-day
deadline. Has the deadline imposed hardships in the past? Do money
market funds anticipate future difficulties in meeting this deadline if
they become subject to the reporting requirement? Should the rule allow
a longer delay in submitting the information (e.g., three days or five
days)? Should it require a shorter delay in submitting the information
(e.g., one day)?
Reporting Threshold. The rule requires a money market fund to
submit portfolio and valuation information to the Commission if its
market-based NAV declines below $.9975. Is this an appropriate
threshold to trigger reporting? Should the threshold be lower (e.g.,
$.9970) or higher (e.g., $.9980 or $.9985)?
Reporting Items. Should we omit any of the disclosure requirements
of rule 30b1-6T? If so, what information should be omitted from the
proposed requirement, and why? Should we require additional or
alternative information, such as the money market fund's client
concentration levels, the percentage of the issue held by the fund, or
last trade price and trade volume for each security?
Regulatory Alternatives. We request comment on feasible
alternatives that would minimize the reporting burdens on money market
funds.\26\ We also request comment on the utility of the reports to the
Commission in relation to the costs to money market funds of providing
the reports.\27\ In addition, we request comment on whether funds
should be permitted to submit a hard copy of their portfolio schedule
information to satisfy the initial or weekly reporting requirement.
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\26\ See section 30(c)(2)(A) of the Investment Company Act
(requiring Commission to consider and seek public comment on
feasible alternatives to the required filing of information that
minimize reporting burdens on funds).
\27\ See section 30(c)(2)(B) of the Investment Company Act
(requiring Commission to consider and seek public comment on the
utility of information, documents and reports to the Commission in
relation to the associated costs).
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IV. Other Matters
The Administrative Procedure Act (``APA'') generally requires an
agency to publish notice of a proposed rulemaking in the Federal
Register.\28\ This requirement does not apply, however, if the agency
``for good cause finds * * * that notice and public procedure thereon
are impracticable, unnecessary, or contrary to the public interest.''
\29\ The APA also generally requires that an agency publish an adopted
rule in the Federal Register 30 days before it becomes effective.\30\
This requirement also does not apply, however, if the agency finds good
cause for making the rule effective sooner.\31\
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\28\ 5 U.S.C. 553(b).
\29\ Id.
\30\ 5 U.S.C. 553(d).
\31\ 5 U.S.C. 553(d)(3).
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For the reasons discussed in this release, we believe that we have
good cause to act immediately to adopt this rule on an interim final
temporary basis. We believe it is important for the Commission to
continue to receive information from money market funds in certain
circumstances so that we can monitor these funds. Adoption of the rule
with an immediate effectiveness will minimize any disruption to the
normal reporting schedule of money
[[Page 48379]]
market funds that meet the reporting threshold. Avoiding such
disruption should obviate the need for those funds to stop and restart
their reporting procedures, and will allow us uninterrupted access to
the information in the reports. This information will permit us to
identify funds that present a greater risk that they will be unable to
maintain their primary investment objectives.
The temporary rule takes effect on September 18, 2009 and will
expire on September 17, 2010. For the reasons discussed above, we have
acted on an interim final basis. We emphasize that we are requesting
comment on the temporary rule. We will carefully consider the comments
we receive, and we intend to respond to them in a subsequent release.
We find that there is good cause to have the temporary rule take
effect on September 18, 2009, and that notice and public procedure in
advance of effectiveness of the rule are impracticable, unnecessary,
and contrary to the public interest.
V. Paperwork Reduction Act Analysis
Interim final rule 30b1-6T under the Investment Company Act
contains a ``collection of information'' within the meaning of the
Paperwork Reduction Act of 1995 (``PRA'').\32\ The title for the new
collection of information is ``Rule 30b1-6T under the Investment
Company Act of 1940, Weekly portfolio report for certain money market
funds.'' We submitted burden estimates to the Office of Management and
Budget (``OMB'') for review and approval in accordance with 44 U.S.C.
3507(j) and 5 CFR 1320.13. Separately, we submitted the burden
estimates to OMB for review and approval in accordance with 44 U.S.C.
3507(d) and 5 CFR 1320.11. OMB has approved the burden estimates
related to our adoption of rule 30b1-6T on an emergency basis. Our new
rule is designed to improve our ability to oversee money market funds
with a greater risk that they will be unable to maintain their primary
investment objectives. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid control number.
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\32\ 44 U.S.C. 3501-3521.
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Rule 30b1-6T requires a money market fund whose market-based net
asset value is less than $.9975 to electronically (i) notify the
Commission promptly and submit a portfolio schedule within one business
day, and (ii) submit a portfolio schedule within two business days
after the end of each week until such time as the fund's market-based
net asset value equals or exceeds $.9975. The rule is intended to
facilitate our oversight of money market funds. The respondents to rule
30b1-6T are investment companies that are regulated as money market
funds under rule 2a-7. Compliance with the rule is mandatory for any
money market fund whose market-based NAV is less than $.9975. Responses
to the disclosure requirements will be kept confidential.
We estimate, based on past experience under the Guarantee Program,
that at any given time 10 money market funds will be required by rule
30b1-6T to provide weekly reports disclosing certain information
regarding the fund's portfolio holdings. We estimate that money market
funds would require an average of approximately 6 burden hours to
compile and electronically submit the initial required portfolio
holdings information, and an average of approximately 4 burden hours in
subsequent reports.\33\ Based on these estimates, we estimate the
annual burden will be 210 hours per money market fund that is required
to provide the information.\34\ Based on an estimate of 10 money market
funds submitting information under the rule, we estimate that, in the
aggregate, rule 30b1-6T would result in 2100 hours, for all money
market funds required to submit portfolio schedules.
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\33\ We understand that the required information is currently
maintained by money market funds pursuant to other regulatory
requirements or in the ordinary course of business. Accordingly, for
the purposes of our analysis, we do not ascribe any time to
gathering the required information.
\34\ Because one report is required each week, a fund would
submit 52 reports in one year. The first report would require 6
hours and subsequent reports would require 4 hours each. The
difference between the hours is due to the fact that funds generally
would not incur the additional start-up time applicable to the first
report. The annual burden of the reporting requirement would be 210
hours (1 report x 6 hours = 6 hours, 51 reports x 4 hours = 204
hours, and 6 hours + 204 hours = 210 hours).
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VI. Cost Benefit Analysis
The Commission is sensitive to the costs and benefits imposed by
its rules. We have identified certain costs and benefits of rule 30b1-
6T and request comment on all aspects of this cost benefit analysis,
including identification and assessment of any costs and benefits not
discussed in this analysis. Where possible, we request that commenters
provide empirical data to support any positions advanced.
A. Benefits
We are adopting rule 30b1-6T to enable the Commission staff to
continue to have effective oversight of money market funds. The rule
would also improve the efficiency and effectiveness of the Commission's
oversight by providing useful information about money market funds that
report under the rule, and by enabling the staff to manage and analyze
money market fund portfolio information more quickly and at a lower
cost than is possible without electronic submissions of portfolio
schedules.
B. Costs
Rule 30b1-6T will impose some costs on funds. For the purposes of
the PRA, we estimated that the rule will result in an increase of 2100
burden hours per year. We estimate that these burden hours will cost a
total of $590,100.\35\ We do not believe that rule 30b1-6T will impose
other significant costs, especially given the nonpublic nature of the
reports required under the rule.
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\35\ This estimate is based on the following calculation: 2100
hours x $281/hour (senior database administrator) = $590,100. This
hourly wage estimate is from the Securities Industry and Financial
Markets Association Report on Management & Professional Salaries
Data (Sept. 2008), modified to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
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In the 2009 Proposing Release, we requested comment on the costs
and benefits of requiring money market funds to report certain
portfolio holdings information to the Commission.\36\ Commenters
generally supported the proposed reporting obligation, but some
expressed concerns about the costs associated with specific disclosure
items, the timing and frequency of the reports (particularly in view of
the amount of disclosure required), and the public availability of the
reports.\37\ We believe that these concerns are not applicable to rule
30b1-6T because the rule's reporting requirement will be triggered only
on the relatively rare occasion that a fund's net asset value fell
below $.9975. In addition, the reports themselves will require less
information and will remain nonpublic.
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\36\ See 2009 Proposing Release, supra note 7, at Section V.
\37\ See, e.g., Committee of Annuity Insurers Comment Letter
(Sept. 8, 2009); Data Communiqu[eacute] Comment Letter (Sept. 8,
2009); The Dreyfus Corporation Comment Letter (Sept. 8, 2009);
Fidelity Investments Comment Letter (Aug. 24, 2009).
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C. Request for Comment
We request comment on all aspects of this cost-benefit analysis.
Commenters should address in particular whether rule 30b1-6T will
generate the anticipated benefits or impose any other costs on money
market funds or other market participants. We also request
[[Page 48380]]
comment as to any costs or benefits associated with rule 30b1-6T that
we may not have considered here, including whether the rule will have a
disproportionate effect on any particular types of fund complexes.
Commenters are specifically invited to share quantified costs and
benefits.
VII. Consideration of Promotion of Efficiency, Competition, and Capital
Formation
Section 2(c) of the Investment Company Act requires the Commission,
when engaging in rulemaking that requires it to consider or determine
whether an action is consistent with the public interest, to consider,
in addition to the protection of investors, whether the action will
promote efficiency, competition, and capital formation.\38\ We
requested comment on whether the proposed reporting requirement, if
adopted, would promote efficiency, competition, or capital formation.
One commenter on the 2009 Proposing Release asserted that the extensive
reporting requirements under proposed rule 30b1-6 would have an adverse
effect on competition for sub-advised funds.\39\ As noted above,
however, rule 30b1-6T requires less disclosure than rule 30b1-6, which
we are continuing to consider. In addition, although rule 30b1-6T
requires more frequent (i.e., weekly) disclosure, it applies to far
fewer funds, because only funds whose market-based net asset value is
less than $.9975 would be required to submit reports. Thus, we believe
that the concerns expressed by the commenter are less applicable to
rule 30b1-6T.
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\38\ 15 U.S.C. 80a-2(c).
\39\ Committee of Annuity Insurers Comment Letter (Sept. 8,
2009) (``Some of these Committee members believe that preparation of
Form N-MFP on a monthly basis would place an undue burden on sub-
advised underlying money market funds. This is because a number of
the information items required by proposed Form N-MFP require
information that typically is in the possession of the sub-adviser
that actually manages the portfolio.'').
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Rule 30b1-6T is intended to facilitate oversight of money market
funds that present a greater risk that they will be unable to maintain
their primary investment objectives. As noted above, the nonpublic
reports are designed to improve the efficiency and effectiveness of the
Commission's oversight of such money market funds, which may also
provide reassurance to investors, which may in turn promote capital
formation. We do not believe that the rule will have any effect on
competition.
VIII. Regulatory Flexibility Act Certification
Section 3(a) of the Regulatory Flexibility Act of 1980 (``RFA'')
\40\ requires the Commission to undertake an initial regulatory
flexibility analysis of the effect of its rules on small entities
unless the Commission certifies that the rules do not have a
significant economic impact on a substantial number of small
entities.\41\ Pursuant to section 605(b) of the RFA, the Commission
hereby certifies that Investment Company Act rule 30b1-6T does not have
a significant impact on a substantial number of small entities.\42\
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\40\ 5 U.S.C. 603(a).
\41\ 5 U.S.C. 605(b).
\42\ Although the requirements of the RFA do not apply to rules
adopted under the APA's ``good cause'' exception, see 5 U.S.C.
601(2) (defining ``rule'' and notice requirement under the APA), we
have nevertheless provided this certification.
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Rule 0-10 of the Investment Company Act defines a ``small entity''
for purposes of the Act as an investment company that, together with
other investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of its
most recent fiscal year. Rule 30b1-6T applies only to money market
funds, and none of these funds meet the definition of a small entity
under the Act.\43\
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\43\ We note that we included a certification under the RFA in
the 2009 Proposing Release on the grounds that none of the money
market funds met the definition of a small entity under the Act, and
we encouraged written comment regarding this certification. See 2009
Proposing Release, supra note 7, at Section VII. No commenters on
that rulemaking have addressed the Regulatory Flexibility Act
certification.
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We solicit comment on the certification. Commenters are asked to
describe the nature of any impact on small entities and provide any
empirical data.
IX. Statutory Authority
The Commission is adopting new rule 30b1-6T pursuant to authority
set forth in Sections 8(b), 30(b), 31(a), and 38(a) of the Investment
Company Act [15 U.S.C. 80a-8(b), 80a-29(b), 80a-30(a), and 80a-37(a)].
List of Subjects in 17 CFR Part 270
Investment companies, Reporting and recordkeeping requirements,
Securities.
Text of Rule
0
For reasons set out in the preamble, Title 17, Chapter II of the Code
of Federal Regulations is amended as follows:
PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940
0
1. The authority citation for Part 270 continues to read, in part, as
follows:
Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, and 80a-
39, unless otherwise noted.
* * * * *
0
2. Section 270.30b1-6T is added to read as follows:
Sec. 270.30b1-6T Weekly portfolio report for certain money market
funds.
(a) Notice and portfolio reports. If the market-based NAV of a
money market fund on any business day (``report date'') is less than
99.75 percent of the fund's stable net asset value per share or stable
price per share pursuant to Sec. 270.2a-7(c)(1) (``stable NAV''), the
fund must, by electronic mail sent to the electronic address
mmfweeklyholdings@sec.gov:
(1) Notify the Commission that its NAV is less than 99.75 percent
of its stable NAV, and provide the Commission with a portfolio schedule
as of the report date, promptly but in no event later than the next
business day after the report date (unless the fund is currently
submitting reports pursuant to this section); and
(2) Provide the Commission a portfolio schedule as of the last
business day of each week, no later than the second business day of the
following week, until the fund's market-based NAV as of such day is
99.75 percent of its stable NAV or greater.
(b) Definitions. For purposes of this section:
(1) Market-based NAV means a money market fund's net asset value
per share calculated using available market quotations or an
appropriate substitute approved by the fund's board of directors as
specified in the procedures that the fund has adopted in accordance
with Sec. 270.2a-7(c)(7) or, if the fund does not value securities
using the amortized cost method, the fund's current net asset value per
share calculated in accordance with Sec. 270.2a-4 (without regard to
Sec. 270.2a-7).
(2) Money market fund means an open-end management investment
company or series thereof that is registered under the Investment
Company Act and is regulated as a money market fund under Sec. 270.2a-
7.
(3) Portfolio schedule means a document prepared in Microsoft Excel
format that contains the following information:
(i) With respect to each money market fund and class thereof,
[[Page 48381]]
(A) Name of the money market fund and class;
(B) SEC file number of the money market fund;
(C) Net asset value per share used to effect shareholder
transactions;
(D) Most recent market-based net asset value (including the value
of any capital support agreement);
(E) Most recent market-based net asset value (excluding the value
of any capital support agreement);
(F) Date as of which the most recent market-based net asset value
was calculated;
(G) Total assets of the fund;
(H) Total net assets of the fund; and
(I) Number of shares outstanding; and
(ii) With respect to each security held by the money market fund:
(A) Name of the security;
(B) CUSIP number (if any);
(C) Principal amount;
(D) Maturity date as determined under Sec. 270.2a-7;
(E) Final maturity date, if different from the maturity date as
determined under Sec. 270.2a-7;
(F) Categorization of the security's status as a ``First Tier
Security,'' ``Second Tier Security'' or a security that is no longer an
``Eligible Security'' under Sec. 270.2a-7;
(G) The most recent market-based price (including the value of any
capital support agreement), or appropriate substitute for such price,
in which case the portfolio schedule or an exhibit to it must describe
with reasonable specificity the appropriate substitute;
(H) The most recent market-based price (excluding the value of any
capital support agreement), or appropriate substitute for such price,
in which case the portfolio schedule or an exhibit to it must describe
with reasonable specificity the appropriate substitute;
(I) The amortized cost value; and
(J) In the case of a tax-exempt security, whether there is a demand
feature, as defined in Sec. 270.2a-7(a)(8).
(c) Nonpublic information. Information provided to the Commission
pursuant to this section shall be nonpublic to the extent permitted by
law.
(d) Expiration. This section will expire on September 17, 2010.
By the Commission.
Dated: September 18, 2009
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-22900 Filed 9-18-09; 4:15 pm]
BILLING CODE 8010-01-P
