OCC's Adoption of Floating NAV for STIFs Highlights Recent Developments Affecting Collective Investment Funds


I. Short-Term Investment Funds: OCC Adopts “Floating Rate” Requirement under Stress Situations -

Effective July 1, 2013, bank-maintained short-term investment funds for fiduciary accounts (“STIFs”) that are subject to Regulation 9 of the Office of the Comptroller of the Currency (“OCC”) are required to implement “floating NAV” unit pricing procedures in certain stress situations. Given the recent announcement that the Securities and Exchange Commission (“SEC”) “will not act to issue a money market fund reform proposal,” potentially including a floating per share net asset value (“NAV”), the OCC’s action creates a clear distinction – and potentially “uneven playing field” – between bank-maintained STIFs and money market mutual funds (“MMMFs”), which continue, at least for the time being, not to be subject to a floating NAV requirement.

The floating NAV requirement for bank STIFs is part of major changes to the rules governing STIFs (the “STIF Rules”) the OCC adopted on September 26th and published in the Federal Register on October 9. This Alert summarizes the highlights of the new STIF Rules. As described below, the new STIF Rules are substantially similar to the changes the OCC proposed earlier this year.

Please see full alert below for more information.

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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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