UBS's Sabatino, Weller Comment
A comment letter from "Robert Sabatino, Managing Director, Head of US Taxable Money Markets, UBS Global Asset Management (Americas) Inc. and Keith A. Weller, Executive Director & Senior Associate General Counsel, UBS Global Asset Management (Americas) Inc. explains, "UBS Global Asset Management (Americas) Inc. ("UBS Global AM") appreciates the opportunity to comment on the Proposal.... For the reasons set forth below, we strongly oppose Alternative 1 and believe that all money funds that meet the requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended ("1940 Act"), should be allowed to continue to maintain a stable NAV per share. We also have concerns regarding Alternative 2 and recommend that, if the US Securities and Exchange Commission ("SEC" or "Commission") determines to adopt Alternative 2, it should provide money fund boards with broad discretion to tailor the specific terms of any liquidity fees and/or redemption gates to the circumstances of a particular money fund, its investors and the market events, without imposing an automatic weekly liquid assets trigger for such fees or gates. Finally, we strongly oppose the removal from Rule 2a-7 of the exemption that allows the use of the amortized cost method of valuation. We support changes to money funds that facilitate the orderly and equitable management of redemptions from funds experiencing significant redemption activity. As detailed below, we support the following approaches: granting fund boards enhanced authority to impose liquidity fees and suspend or gate redemptions, tailored as necessary to address a fund's particular circumstances prevailing at the time of the situation; enhancing website, prospectus and marketing disclosures; and enhancing money fund diversification requirements. Based on consultations with our clients, we believe that the Proposal would significantly decrease demand for money funds, substantially impacting competition, efficiency and capital formation in the economy. In particular, the Proposal would impose considerable costs on all money funds, which would be borne by money fund investors through higher expenses, resulting in lower yields. Additionally, if the Proposal is adopted, money funds would no longer be able to provide the key benefits to investors of offering same day and intra-day liquidity."
