A recent Comment letter to the SEC from Ernst & Young LLP says, "Many of the issues on which the SEC is seeking comment relate to the impact the proposed rules might have on investors and registrants that hold investments in money market funds. Our comments are limited to the possible accounting and auditing implications of the proposed alternatives. Current US GAAP explicitly states that money market funds are commonly considered cash equivalents. The main characteristics for an investment to be classified as a cash equivalent is that it is short term, highly liquid, "readily convertible to known amounts of cash" and presents "insignificant risk of changes in value because of changes in interest rates." We agree with the Commission that investments in money market funds with a floating NAV under amended Rule 2a-7 would continue to meet the definition of a cash equivalent because the fluctuations in value would be expected to be insignificant. We also concur with the Commission that the evaluation of whether an investment in a money market fund meets the requirements of a cash equivalent should be performed periodically. We agree with the Commission that investments in money market funds with both a floating NAV and fees and gates under the proposed amendments would continue to meet the definition of a cash equivalent. We concur that the potential suspension of redemptions for up to 30 days in contingent circumstances would not violate the requirement that a cash equivalent be "readily convertible to known amounts of cash." We also concur that the potential imposition of a liquidity fee of up to 2% in contingent circumstances would not violate the requirement that a cash equivalent present "insignificant risk of changes in value.""

Email This Article




Use a comma or a semicolon to separate

captcha image

Daily Link Archive

2024 2023 2022
March December December
February November November
January October October
September September
August August
July July
June June
May May
April April
March March
February February
January January
2021 2020 2019
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2018 2017 2016
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2015 2014 2013
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2012 2011 2010
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2009 2008 2007
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2006
December
November
October
September