It appears that most money market mutual funds will be open on Thursday, January 9, though the New York Stock Exchange and stock markets will close for the National Day of Mourning for the death of former President James "Jimmy" Carter. Money funds had previously closed for the President Bush Day of Mourning but many were open for the President Ford Day of Mourning. So far, Fidelity, BlackRock, J.P. Morgan Asset Management and Federated Hermes have announced that they will be open, though some of BlackRock's retail MMFs will close. Given this news, Crane Data will remain open and will publish our Money Fund Intelligence Daily, MFI International and Form N-MFP Holdings on their usual schedule Thursday.
BlackRock says in a message to clients, "Thursday, January 9, 2025, has been designated a National Day of Mourning in the United States to honor the passing of former President James Earl Carter, Jr.. The New York Stock Exchange, Nasdaq Inc.'s U.S. equities and options markets and CME Group Inc's. U.S.-based equity markets will be closed on that day. The Securities Industry and Financial Markets Association has recommended that U.S. bond markets close early at 2 PM ET. Banks, including the Federal Reserve Bank of New York, will remain open on January 9."
They explain, "Accordingly, the following funds will be open on January 9 and calculate both a NAV and 1-day distribution rate: BlackRock Liquidity Funds: FedFund, MuniCash, T-Fund and TempCash; BlackRock Cash Funds: Inst and Treas; BlackRock Institutional Cash Series plc: ICS US Dollar Liquidity Fund, ICS US Treasury Fund, ICS US Dollar LEAF and ICS US Dollar Ultra Short Bond Fund. The following funds will be open ... but will close at 2:00 PM ET: BlackRock Liquidity Funds: Treasury Trust Fund and Liquid Federal Trust Fund. The below funds will be closed on January 9: BlackRock Wealth Liquid Environmentally Aware Fund, BlackRock Government Money Market Portfolio, BlackRock Government Money Market V.I. Fund, Summit Cash Reserves Fund, Circle Reserve Fund and BlackRock Short Obligations Fund."
A message from Federated Hermes states, "All Federated Hermes' money market funds and liquidity products will be open for business as usual on January 9, 2025. In addition to Federated Hermes money market funds, certain advisory products and accounts, the Federated Hermes Prime Cash Collective Investment Fund, and the Federated Hermes Prime Private Liquidity Fund will be open for trading."
In other news, a "US Regulatory Intelligence" update from law firm Norton Rose Fulbright titled "SEC Mandates Broker-Dealers Calculate Cash Custody Daily," explains, "The SEC adopted amendments to Exchange Act Rule 15c3-3 ('Customer protection-reserves and custody of securities'). The amendments require broker-dealers that carry over $500 million in customer credit to perform daily cash reserve account calculations." They tell us, "The amendments: require certain broker-dealers to increase the frequency of the computations of the net cash they owe to customers and other broker-dealers from weekly to daily under Rule 15c3-3" and "permit certain broker-dealers that perform a daily customer reserve computation to decrease the required 3 percent 'buffer' in the customer reserve bank account by reducing the customer-related receivables charge (i.e. aggregate debit items charge) from 3 percent to 2 percent in the computation under Rules 15c3-3 and 15c3-1—the broker-dealer net capital rule."
The brief says, "SEC Chair Gary Gensler highlighted that 'nine of the largest broker-dealers already make these calculations on a daily basis.' He stated that '[the] amendments are intended to reduce the likelihood of any mismatch between the amount of segregated funds and the net cash owed to customers and other broker-dealers,' and that 'lowering the likelihood of mismatches will help to protect the Securities Investor Protection Corporation (SIPC) Fund.'
Author Steven Lofchie continues, "SEC Commissioner Hester M. Peirce said that, while the final amendments 'are not perfect,' they are 'net beneficial to investors.' She highlighted that '[the amendments] increase costs and operational challenges for 40 of the estimated 49 broker-dealers subject to the daily computation requirement,' but concluded that 'the final amendments do incorporate an increased threshold for triggering the requirement that mitigates some of the costs. In addition, it allows carrying broker-dealers that use the alternative method for net capital and perform a daily customer reserve computation to reduce their aggregate debit items by 2% (instead of the 3% that is currently required)."
The piece adds, "In dissent, SEC Commissioner Mark T. Uyeda argued that the Commission overlooked 'many suggestions from commentators that might potentially lower cost while still reducing risk.' He said that the adoption was rushed in an 'apparent attempt' to finalize the amendments prior to the end of the current administration. Mr. Uyeda said that the SEC should have taken additional time to consider comments and data as well as interact with the public. He argued that the SEC 'may end up leaving yet another mess for its successors to clean up.'"
The publication FinanceFeeds also comments on the new rule in, "SEC enhances customer protection rules for broker-dealers." They write, "The Securities and Exchange Commission (SEC) has adopted amendments to its customer protection rule, Rule 15c3-3. The amendments require certain broker-dealers to change the frequency of their net cash computations from weekly to daily. The change aims to safeguard better customer and PAB (broker-dealer's proprietary accounts) cash."
Their article continues, "SEC Chair Gary Gensler endorsed amendments requiring large broker-dealers to compute and segregate customer balances daily, rather than weekly. He noted that these changes reflect the evolution of markets since 1972, when the Customer Protection Rule first took effect. He explained that daily calculations help reduce mismatches between segregated funds and cash owed to customers. Gensler also noted a reduction of the reserve 'buffer' from 3 percent to 2 percent for broker-dealers performing daily computations."
They quote Gensler, "The Customer Protection Rule requires broker-dealers that custody customers' cash and securities to maintain a special reserve bank account that contains the net cash a broker-dealer owes to its customers. The rule, which we're updating, currently requires broker-dealers to calculate and deposit the appropriate balance for that account on a weekly basis. Today's amendments would change this requirement for the largest broker-dealers to daily computation rather than weekly."
Finally, the piece also quotes SEC Commissioner Hester Peirce, "I hope that broker-dealers will take the Commission up on its invitation to engage with the staff on potential issues in dealing with what one commenter called 'cash in motion.' I also look forward to receiving feedback on any operational challenges that arise as broker-dealers implement these requirements, particularly with respect to exigent circumstances and potential challenges with resources around holidays and days when the markets close early."
