SEC Adopts Further Revisions to Rule 2a-7

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The SEC recently adopted rule amendments removing credit rating references in Rule 2a-7 and Form N-MFP. Issuer diversification provisions were also amended to eliminate a current exclusion for securities subject to a guarantee issued by a non-controlled person.

ELIGIBLE SECURITIES AND MINIMAL CREDIT RISK DETERMINATIONS -

As amended, the definition of “eligible security” in Rule 2a-7 will require a “single uniform minimal credit risk finding, based on the capacity of the issuer or guarantor of a security to meet its financial obligations.” According to the SEC, eliminating references to NRSRO ratings from Rule 2a-7 is not intended to change the current risk profile of money market funds, nor should it change fund boards’ evaluation of minimal credit risk.

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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