OCC Tightens Regulatory Requirements for STIFs

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Overview -

The U.S. Office of the Comptroller of the Currency (“OCC”) adopted a final rule on October 9, 2012 that revises the requirements imposed on national banks’ short-term investment funds (“STIFs”). In particular, the final rule enhances current requirements imposed on STIFs under Regulation 9 (“STIF Rule”). Although STIFs are similar to money market funds (“money funds”) registered under the Investment Company Act of 1940, as amended (“1940 Act”), and the two products faced similar issues during the 2008 financial crisis, up until this point, STIFs have escaped additional regulations like those imposed on money funds aspart of the 2010 amendments to Rule 2a-7 under the 1940 Act (the “2010 Amendments”). This On Point discusses the amended STIF Rule and highlights similarities and differences between the amended Rule and Rule 2a-7.

BACKGROUND ON STIFS AND THE AMENDED STIF RULE -

A STIF is a type of collective investment fund (“CIF”), which, like an investment company, pools together investments for participants who then own participating interests in the pool (analogous to investment company shares) rather than the assets of the fund directly. However, CIFs (including STIFs) are excluded from regulation under the 1940 Act...

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Published In: Administrative Agency Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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