Order of Temporary Extension of Maturity Limits for Short-Term Investment Funds, 16887-16888 [2020-06286]

Download as PDF 16887 Rules and Regulations Federal Register Vol. 85, No. 58 Wednesday, March 25, 2020 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 9 Order of Temporary Extension of Maturity Limits for Short-Term Investment Funds Office of the Comptroller of the Currency, Department of Treasury. ACTION: Order of temporary extension of maturity limits for short-term investment funds. AGENCY: The OCC has adopted an interim final rule adding a reservation of authority provision to the OCC’s shortterm investment fund (STIF) rule (STIF Rule) for national banks acting in a fiduciary capacity. The reservation of authority addresses the STIF Rule’s limits on weighted average portfolio maturity, weighted average portfolio life maturity, and the method for determining those limits. The OCC has also issued an administrative order pursuant to the reservation of authority contained in the interim final rule. The order states that banks seeking to comply with the STIF Rule’s portfolio maturity and life limits will be deemed to be in compliance with those requirements, if the STIF maintains a dollar-weighted average portfolio maturity of 120 days or less, and the STIF maintains a dollar-weighted average portfolio life maturity of 180 days or less. DATES: The administrative order is effective March 23, 2020, and is applicable beginning March 21, 2020. FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset Management Policy, Market Risk Policy Division, Bank Supervision Policy, (202) 649–6401, Stephanie Boccio, Asset Management Lead Expert, Systemic Risk Identification Support and Specialty Supervision, (202) 649–6397, or Jamey Basham, Assistant Director, Chief khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 15:49 Mar 24, 2020 Jkt 250001 Counsel’s Office, (202) 649–5490, for persons who are deaf or hearing impaired, TTY, (202) 649–5597, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. SUPPLEMENTARY INFORMATION: Section 9.18 of the OCC’s regulations (12 CFR 9.18) sets out regulatory requirements for certain bank-managed fiduciary investment funds that hold pooled assets which are funded through contributions by the fund’s participants. For Short-term Investment Funds (STIFs) subject to § 9.18, these requirements include § 9.18(b)(4)(iii)(B), requiring the STIF to be operated pursuant to a written, board-approved plan under 12 CFR 9.18(b)(1) 1 that requires the fund to maintain a dollarweighted average portfolio maturity of 60 days or less and a dollar-weighted average portfolio life maturity of 120 days or less, as determined in the same manner as is required by the Securities and Exchange Commission pursuant to Rule 2a–7 for money market mutual funds (17 CFR 270.2a–7). Pursuant to § 9.18(b)(4)(iv), the OCC has reserved the authority to, among other things, issue an order temporarily extending these limits if the OCC determines the financial markets are in a period of market stress negatively affecting, on a temporary basis, the ability of banks to operate in compliance with the requirements of § 9.18(b)(4)(iii)(B). Recent events have significantly and adversely impacted global financial markets, and the OCC is concerned about the potential effects on STIFs operated by national banks. The spread of the Coronavirus Disease 2019 (COVID–2019) has slowed economic activity in many countries, including the United States. Sudden disruptions in financial markets have put increasing liquidity pressure on money market mutual funds, as they have been faced with redemption requests from clients with immediate cash needs. The Board of Governor of the Federal Reserve System, with the approval of the Secretary of the Treasury, has authorized the Federal Reserve Bank of Boston to establish the Money Market Mutual Fund Liquidity Facility, pursuant to section 13(3) of the Federal 1 Section 9.18(b)(a) also permits the written plan to be approved by a committee authorized by the board. PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 Reserve Act,2 as a measure to ameliorate these liquidity pressures. Although STIFs do not serve the same broad investor market as MMMFs, the OCC remains concerned that, in light of the acute effects the COVID–2019 virus is triggering across the markets broadly, there may be elevated participation interest withdrawals for STIFs operated by national banks, notwithstanding these differences between STIFs and MMMFs. Regulatory authorities supervising other categories of banks operating STIFs—in accordance with the legal requirements governing those banks and incorporating the OCC’s STIF rules as part of those requirements— have conveyed similar concerns to the OCC. In addition to the OCC’s concerns about unusual withdrawal levels, the OCC observes that STIF investment portfolios are generally made up of the same types of securities and investments as those held by MMMFs. Accordingly, liquidity pressures related to the COVID–2019 virus in the marketplace for those assets raises similar concerns for STIFs as those presented for MMMFs. Acute marketwide disturbances in the depth of liquidity available for a bank seeking to purchase and sell portfolio assets to maintain a STIF’s liquidity put pressure on the bank’s ability to perform these functions. In light of these reasons and pursuant to § 9.18(b)(4)(iv), the OCC hereby determines that, effective immediately, banks seeking to comply with the requirements of section 9.18(b)(4)(iii)(B) will be deemed to be in compliance with that section if: 1. The STIF maintains a dollarweighted average portfolio maturity of 120 days or less, as determined in the same manner as is required by the Securities and Exchange Commission pursuant to Rule 2a–7 for money market mutual funds (17 CFR 270.2a–7); 2. The STIF maintains a dollarweighted average portfolio life maturity of 180 days or less, as determined in the same manner as is required by the Securities and Exchange Commission pursuant to Rule 2a–7 for money market mutual funds (17 CFR 270.2a–7); 3. The bank makes a determination that using these temporary limits would be in the best interests of the STIF under applicable law. This determination may 2 12 U.S.C. 343(3). E:\FR\FM\25MRR1.SGM 25MRR1 16888 Federal Register / Vol. 85, No. 58 / Wednesday, March 25, 2020 / Rules and Regulations be made under the bank’s standard procedures for making such determinations in regards to the best interests of its collective investment funds; and 4. The bank must make any necessary amendments to the written plan for the STIF to reflect these temporary changes. 5. The OCC also hereby determines that the relief provided by this administrative order terminates on July 20, 2020, unless the OCC revises this order to provide otherwise before that date. By authority of the Comptroller of the Currency. Dated: March 21, 2020. Morris R. Morgan, First Deputy Comptroller, Comptroller of the Currency. [FR Doc. 2020–06286 Filed 3–23–20; 11:15 am] BILLING CODE 4810–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 9 [Docket No. OCC–2020–0012] RIN 1557–AE84 Short-Term Investment Funds Office of the Comptroller of the Currency, Treasury (OCC). ACTION: Interim final rule and request for comment. AGENCY: The OCC is adopting an interim final rule to revise the OCC’s short-term investment fund (STIF) rule (STIF Rule) for national banks acting in a fiduciary capacity. Sudden disruptions in the financial markets have created conditions that may constrain the ability of a national bank’s management team to execute certain elements of a STIF’s written investment policy, specifically with regard to investment plan components addressing the weighted average maturity and weighted average life of the STIF’s investment portfolio. The OCC is issuing this interim final rule to allow national banks to operate affected STIFs on a limited-time basis with increased maturity limits under these circumstances. khammond on DSKJM1Z7X2PROD with RULES SUMMARY: The interim final rule is effective March 23, 2020, and is applicable beginning March 20, 2020. Comments on the interim final rule must be received no later than May 11, 2020. ADDRESSES: Commenters are encouraged to submit comments through the Federal DATES: VerDate Sep<11>2014 15:49 Mar 24, 2020 Jkt 250001 eRulemaking Portal or email, if possible. Please use the title ‘‘Short-term Investment Funds’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0012’’ in the Search Box and click ‘‘Search.’’ Click on ‘‘Comment Now’’ to submit public comments. For help with submitting effective comments please click on ‘‘View Commenter’s Checklist.’’ Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0012’’ in the Search Box and click ‘‘Search.’’ Public comments can be submitted via the ‘‘Comment’’ box below the displayed document information or by clicking on the document title and then clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with submitting effective comments please click on ‘‘Commenter’s Checklist.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454–9859 Monday–Friday, 9 a.m.–5 p.m. ET or email regulations@ erulemakinghelpdesk.com. • Email: regs.comments@ occ.treas.gov. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Fax: (571) 465–4326. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2020–0012’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information provided such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 you consider confidential or inappropriate for public disclosure. You may review comments and other related materials that pertain to this rulemaking action by any of the following methods: • Viewing Comments Electronically— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0012’’ in the Search box and click ‘‘Search.’’ Click on ‘‘Open Docket Folder’’ on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on ‘‘View all documents and comments in this docket’’ and then using the filtering tools on the left side of the screen. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0012’’ in the Search Box and click ‘‘Search.’’ Click on the ‘‘Comments’’ tab. Comments can be viewed and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen. Supporting materials can be viewed by clicking on the ‘‘Documents’’ tab and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454– 9859 Monday–Friday, 9 a.m.–5p.m. ET or email regulations@ erulemakinghelpdesk.com. The docket may be viewed after the close of the comment period in the same manner as during the comment period. • Viewing Comments Personally: You may personally inspect comments at the OCC, 400 7th Street SW, Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649–6700 or, for persons who are deaf or hearing impaired, TTY, (202) 649–5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect comments. FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset Management Policy, Market Risk Policy Division, Bank Supervision Policy, (202) E:\FR\FM\25MRR1.SGM 25MRR1

Agencies

[Federal Register Volume 85, Number 58 (Wednesday, March 25, 2020)]
[Rules and Regulations]
[Pages 16887-16888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06286]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 85, No. 58 / Wednesday, March 25, 2020 / 
Rules and Regulations

[[Page 16887]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 9


Order of Temporary Extension of Maturity Limits for Short-Term 
Investment Funds

AGENCY: Office of the Comptroller of the Currency, Department of 
Treasury.

ACTION: Order of temporary extension of maturity limits for short-term 
investment funds.

-----------------------------------------------------------------------

SUMMARY: The OCC has adopted an interim final rule adding a reservation 
of authority provision to the OCC's short-term investment fund (STIF) 
rule (STIF Rule) for national banks acting in a fiduciary capacity. The 
reservation of authority addresses the STIF Rule's limits on weighted 
average portfolio maturity, weighted average portfolio life maturity, 
and the method for determining those limits. The OCC has also issued an 
administrative order pursuant to the reservation of authority contained 
in the interim final rule. The order states that banks seeking to 
comply with the STIF Rule's portfolio maturity and life limits will be 
deemed to be in compliance with those requirements, if the STIF 
maintains a dollar-weighted average portfolio maturity of 120 days or 
less, and the STIF maintains a dollar-weighted average portfolio life 
maturity of 180 days or less.

DATES: The administrative order is effective March 23, 2020, and is 
applicable beginning March 21, 2020.

FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset 
Management Policy, Market Risk Policy Division, Bank Supervision 
Policy, (202) 649-6401, Stephanie Boccio, Asset Management Lead Expert, 
Systemic Risk Identification Support and Specialty Supervision, (202) 
649-6397, or Jamey Basham, Assistant Director, Chief Counsel's Office, 
(202) 649-5490, for persons who are deaf or hearing impaired, TTY, 
(202) 649-5597, Office of the Comptroller of the Currency, 400 7th 
Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION: Section 9.18 of the OCC's regulations (12 
CFR 9.18) sets out regulatory requirements for certain bank-managed 
fiduciary investment funds that hold pooled assets which are funded 
through contributions by the fund's participants. For Short-term 
Investment Funds (STIFs) subject to Sec.  9.18, these requirements 
include Sec.  9.18(b)(4)(iii)(B), requiring the STIF to be operated 
pursuant to a written, board-approved plan under 12 CFR 9.18(b)(1) \1\ 
that requires the fund to maintain a dollar-weighted average portfolio 
maturity of 60 days or less and a dollar-weighted average portfolio 
life maturity of 120 days or less, as determined in the same manner as 
is required by the Securities and Exchange Commission pursuant to Rule 
2a-7 for money market mutual funds (17 CFR 270.2a-7).
---------------------------------------------------------------------------

    \1\ Section 9.18(b)(a) also permits the written plan to be 
approved by a committee authorized by the board.
---------------------------------------------------------------------------

    Pursuant to Sec.  9.18(b)(4)(iv), the OCC has reserved the 
authority to, among other things, issue an order temporarily extending 
these limits if the OCC determines the financial markets are in a 
period of market stress negatively affecting, on a temporary basis, the 
ability of banks to operate in compliance with the requirements of 
Sec.  9.18(b)(4)(iii)(B).
    Recent events have significantly and adversely impacted global 
financial markets, and the OCC is concerned about the potential effects 
on STIFs operated by national banks. The spread of the Coronavirus 
Disease 2019 (COVID-2019) has slowed economic activity in many 
countries, including the United States. Sudden disruptions in financial 
markets have put increasing liquidity pressure on money market mutual 
funds, as they have been faced with redemption requests from clients 
with immediate cash needs. The Board of Governor of the Federal Reserve 
System, with the approval of the Secretary of the Treasury, has 
authorized the Federal Reserve Bank of Boston to establish the Money 
Market Mutual Fund Liquidity Facility, pursuant to section 13(3) of the 
Federal Reserve Act,\2\ as a measure to ameliorate these liquidity 
pressures. Although STIFs do not serve the same broad investor market 
as MMMFs, the OCC remains concerned that, in light of the acute effects 
the COVID-2019 virus is triggering across the markets broadly, there 
may be elevated participation interest withdrawals for STIFs operated 
by national banks, notwithstanding these differences between STIFs and 
MMMFs. Regulatory authorities supervising other categories of banks 
operating STIFs--in accordance with the legal requirements governing 
those banks and incorporating the OCC's STIF rules as part of those 
requirements--have conveyed similar concerns to the OCC.
---------------------------------------------------------------------------

    \2\ 12 U.S.C. 343(3).
---------------------------------------------------------------------------

    In addition to the OCC's concerns about unusual withdrawal levels, 
the OCC observes that STIF investment portfolios are generally made up 
of the same types of securities and investments as those held by MMMFs. 
Accordingly, liquidity pressures related to the COVID-2019 virus in the 
marketplace for those assets raises similar concerns for STIFs as those 
presented for MMMFs. Acute market-wide disturbances in the depth of 
liquidity available for a bank seeking to purchase and sell portfolio 
assets to maintain a STIF's liquidity put pressure on the bank's 
ability to perform these functions.
    In light of these reasons and pursuant to Sec.  9.18(b)(4)(iv), the 
OCC hereby determines that, effective immediately, banks seeking to 
comply with the requirements of section 9.18(b)(4)(iii)(B) will be 
deemed to be in compliance with that section if:
    1. The STIF maintains a dollar-weighted average portfolio maturity 
of 120 days or less, as determined in the same manner as is required by 
the Securities and Exchange Commission pursuant to Rule 2a-7 for money 
market mutual funds (17 CFR 270.2a-7);
    2. The STIF maintains a dollar-weighted average portfolio life 
maturity of 180 days or less, as determined in the same manner as is 
required by the Securities and Exchange Commission pursuant to Rule 2a-
7 for money market mutual funds (17 CFR 270.2a-7);
    3. The bank makes a determination that using these temporary limits 
would be in the best interests of the STIF under applicable law. This 
determination may

[[Page 16888]]

be made under the bank's standard procedures for making such 
determinations in regards to the best interests of its collective 
investment funds; and
    4. The bank must make any necessary amendments to the written plan 
for the STIF to reflect these temporary changes.
    5. The OCC also hereby determines that the relief provided by this 
administrative order terminates on July 20, 2020, unless the OCC 
revises this order to provide otherwise before that date.

    By authority of the Comptroller of the Currency.

    Dated: March 21, 2020.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
[FR Doc. 2020-06286 Filed 3-23-20; 11:15 am]
 BILLING CODE 4810-01-P