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.