Current through Reg. 49, No. 38; September 20, 2024
(a) Introduction.
(1) Certain open-end investment companies
commonly known as money market funds have investment characteristics and sales
patterns materially different from other types of mutual funds and other
securities. These funds, defined in subsection (b) of this section, are
designed to attract a large volume of comparatively short-term investments by
purchasers. As early redemptions are contemplated by both purchaser and seller,
and because these funds continuously offer to repurchase their own securities
and issue new securities to new and repeat investors, an excessive amount of
fees may be paid under the Texas Securities Act, §4006.055, for the
securities issued. Therefore, pursuant to the Act, §4005.024, the State
Securities Board conditionally exempts from the fee provisions of the Texas
Securities Act certain investment company securities defined herein provided
all the requirements of this section are satisfied.
(2) Nothing in this section shall be
construed to relieve any open-end investment company from any condition or
requirement of registration under the Texas Securities Act except as
specifically stated herein or in Chapter 114 of this title (relating to Federal
Covered Securities).
(b)
Definition. In this section, a "money market fund" or "fund" is an open-end
investment company which must meet all of the following conditions.
(1) The fund must engage in a continuous
offering of its securities.
(2) The
fund must hold itself out to be a money market fund or an equivalent to a money
market fund and must be in compliance with the Investment Company Act of 1940,
Rule 2a-7 (17 CFR §
270.2a-7, as amended).
(3) The fund must not pay or charge sales
commissions or redemption fees except nominal exchange fees which may not be
used for sales expenses or in lieu of initial sales charges or redemption
fees.
(4) The fund's total charges
against net assets for sales distribution activities and/or the servicing of
shareholder accounts must not be in excess of .25% of average net assets per
annum.
(5) With the exception of
mergers, consolidations, or acquisitions of assets, or as noted in paragraph
(6) of this subsection, the fund's investments in other investment companies
must be limited to:
(A) 10% of the fund's
total assets;
(B) other investment
companies with substantially similar investment objectives; and
(C) other investment companies with charges
and fees substantially similar to those set forth in paragraphs (3) and (4) of
this subsection.
(6) In
the case of a master/feeder fund structure:
(A) feeder fund(s) must meet, or invest in a
master fund which meets, paragraphs (1)-(4) of this subsection;
(B) when viewed together, the master/feeder
fund(s) must meet paragraphs (3) and (4) of this subsection; and
(C) all feeder funds must have investment
objectives substantially similar to those of the master fund.
(7) A currently authorized fund
which has been granted money market status is not required to comply with this
subsection until the fund files its Year-End Report of Sales of Federal Covered
Securities by a Money Market Fund on Form 133.27, but it is required to comply
with the subsection as it was in effect at the time that the fund was
designated a money market fund for purposes of this section.
(c) Request for determination.
(1) At the time an applicant submits
documents or fees in connection with an authorization to sell federal covered
securities, or at any time thereafter, the applicant may request the Securities
Commissioner determine that the issuer is a money market fund as defined in
this section. The request shall be made in writing on Form 133.26 of this title
(relating to Request for Determination of Money Market Fund Status for Federal
Covered Securities). The Securities Commissioner shall review the request and
any other information the Securities Commissioner deems relevant to the
determination of whether the issuer is a money market fund for purposes of this
section.
(2) If the request is made
after the issuance of the fund's original authorization, an amendment fee as
prescribed by the Texas Securities Act, §4006.001(1) will be required.
Additional sales information will be required since only the federal covered
securities authorized and sold after the date the Securities Commissioner
determines that the issuer is a money market fund will be subject to the
reduced fees under subsection (d) of this section.
(d) Conditional exemption. Subject to the
other provisions of this section, federal covered securities issued by money
market funds are exempt from the fee imposed by the Texas Securities Act,
§4006.055, provided all of the following requirements are satisfied at the
time of sale of the federal covered securities.
(1) An applicant has requested that the
Securities Commissioner determine that the issuer is a money market fund as
defined in this section.
(2) The
Securities Commissioner has determined that the issuer is a money market fund
as defined in this section.
(3) For
each filing of an original, renewal, or amended authorization under the
conditional exemption provided by this section, the applicant has paid the
filing fee required by the Act, §4006.001(1), in addition to the reduced
fee imposed by paragraph (5) of this subsection.
(4) During the current calendar year, the
fund has an aggregate authorized amount of $10 million of federal covered
securities for sale in Texas.
(5)
The fund has paid the reduced authorization fee imposed by this paragraph for
the aggregate amount of federal covered securities proposed to be sold during
the current calendar year under this conditional exemption. The reduced
authorization fee imposed by this paragraph for authorization of federal
covered securities in excess of the first $10 million aggregate amount of
securities sold is:
(A) for the next $10
million of federal covered securities authorized, 1/20 of 1.0% of the aggregate
amount to be sold;
(B) for the next
$30 million of federal covered securities authorized, 1/50 of 1.0% of the
aggregate amount to be sold;
(C)
for the next $50 million of federal covered securities to be authorized, 1/100
of 1.0% of the aggregate amount to be sold; and
(D) 1/200 of 1.0% of the aggregate amount on
the remainder of the federal covered securities authorized to be
sold.
(e)
Oversales. The reduced authorization fee schedule imposed by subsection (d)(5)
of this section shall not apply to any federal covered securities authorized
under the Act, §4006.151. All fees paid for authorization of federal
covered securities of money market funds pursuant to §4006.151 shall be
computed as set forth in the Act, §§4006.001(1), 4006.055, and
4006.151.
(f) Unsold balance at end
of calendar year. In any calendar year, the fees required to be paid by a fund
for sales that year will be calculated under subsection (d)(4) and (5) of this
section without regard to the amount of fees paid or federal covered securities
sold in any other year. If, at the end of any calendar year a money market fund
has a remaining unsold balance of federal covered securities authorized to be
sold, the dollar amount of fees paid under subsection (d) of this section for
authorization of the unsold balance may be reapplied to fees required in the
next calendar year, but no unsold balance of authorized but unsold federal
covered securities will be carried forward to the subsequent calendar
year.
(g) Year end reports. To
qualify for the reduced fees accorded to a fund granted money market fund
status pursuant to this section, the fund must file a year end report of sales
on Form 133.27 of this title (relating to Year-End Report of Sales of Federal
Covered Securities by a Money Market Fund) in January of each year which
reflects the amount of federal covered securities sold in the previous year,
the balance of fees paid for authorization of any unsold balance in the
previous year and the recalculated balance of authorized federal covered
securities at the beginning of the current year. In calculating fees applied to
sales during the previous year, fees will first be applied at the higher rates
specified in the reduced fee schedule in subsection (d)(5) of this section, and
then at more reduced rates as sales volume increases, and not vice versa. Funds
should consult Form 133.27 in determining how to compute fees.
(h) Effect of noncompliance. If at any time
the business or plan of business of any fund has been altered so that it is no
longer a money market fund within subsection (b) of this section, such an
issuer shall not be entitled to any reduction of fees as provided in subsection
(d)(5) of this section. Such fund shall not be entitled to any reduction in
fees as provided in subsection (d)(5) of this section for any sales of its
securities from the time at which it ceases to comply with subsection (b) of
this section until the Securities Commissioner redetermines in a subsequent
calendar year that the issuer is again a money market fund as defined in
subsection (b) of this section, and instead fees shall be calculated for such
issuer as provided in the Act, Chapter 4006, Subchapters A, B, and D.
(i) Appeals. If any person should take
exception to an action of the Securities Commissioner in making, failing to
make, or revoking a determination whether that person is a money market fund,
the aggrieved person may appeal the decision of the Securities Commissioner as
provided in the Act, §4007.107.
(j) Effect of a prior determination. A fund
offering federal covered securities, that was determined to be a money market
fund prior to October 11, 1996, will continue to be considered a money market
fund for purposes of this section without the necessity of submitting a new
request for determination, so long as the fund continues to meet the definition
of a "money market fund" in subsection (b) of this section.
