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H.R. 2319 (115th): Consumer Financial Choice and Capital Markets Protection Act of 2018

H.R. 2319 reverses portions of the U.S. Securities and Exchange Commission’s (SEC or Commission) 2014 rule on money market funds (MMFs). Specifically, the legislation allows MMFs, regardless of whether their investors are retail or institutional, to elect to use the stable Net Asset Value (NAV) approach instead of a floating NAV to calculate the price per share. Additionally, MMFs, either by making the election to use a stable NAV or through its board of directors, can choose not to be subject to the mandatory liquidity fee provision of the SEC’s 2014 rule.

The bill does not, however, address the discretion afforded to boards of MMFs under the SEC rule that allows MMFs to implement gates to limit redemptions in times of stress. Additionally, the bill contains certain prohibitions against the use of taxpayer dollars to bail-out MMFs and requires disclosure of the bail-out prohibition provisions, but the bill does not restrict the Federal Reserve’s authority to implement a program or facility with broad-based eligibility established in unusual or exigent circumstances that may benefit MMFs.

Last updated Oct 1, 2018. Source: Republican Policy Committee

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Aug 24, 2018.

Consumer Financial Choice and Capital Markets Protection Act of 2018

This bill amends the Investment Company Act of 1940 to allow a money market fund, under specified conditions, to elect to operate using a different method of valuation than is otherwise required.

Under specified conditions, a money market fund shall not be subject to certain requirements related to the imposition of liquidity fees.

Certain federal assistance may not be provided directly to any money market fund. This limitation on federal assistance must be disclosed in a money market fund's advertising and sales literature.