On April 9th, the Office of the Comptroller of the Currency (the OCC) proposed major changes to rules governing bank-maintained short-term investment funds for fiduciary accounts (STIFs). According to the OCC, the proposed changes (the Proposal) in the rules (STIF Rules) are designed to safeguard against the risk of loss to a STIF, offer greater transparency to participants and regulators concerning STIF holdings and pricing, and protect STIF participants from undue dilution in the case where the market value of a STIF’s assets drops significantly.
The proposed changes are in response to suggestions in the 2010 report of the President’s Working Group on Financial Markets – which reviewed causes and effects of the 2007-09 financial market turmoil – that bank regulators “consider additional restrictions to mitigate systemic risk for bank common and collective funds . . . that seek a stable NAV but that are exempt from registration” under the securities laws. While acknowledging differences between STIFs and registered money market funds, particularly with respect to the nature of their investors, the OCC also noted the proposed changes “are informed by . . . but differ in certain respects from” changes to Rule 2a-7 under the Investment Company Act of 1940 (the 1940 Act) adopted by the Securities and Exchange Commission (the SEC) in 2010.
The OCC requested comments and posed 13 specific questions about various aspects of the Proposal. Comments and responses are due by June 8, 2012.
Please see full publication below for more information.
