SEC's Champ on Lessons Learned
Norm Champ, Director of the Division of Investment Management at the SEC, delivered a speech at ICI's Securities Law Development Conference on the "Top 10 Lessons Learned and Points to Remember from 2014." Here are some excerpts that related to money market funds: "9. The Division of Investment Management is Not a Regulatory Island, Nor Should it Be. The Volcker Rule is not the only recent example of regulatory coordination that required thoughtful joint action. As you know, the Commission successfully adopted amendments to the rules that govern money market mutual funds in July. The adopted money market reforms are intended to make our financial system more resilient and enhance the transparency and fairness of these products for America's investors. These reforms would not have been possible without the critical assistance we received from Treasury and the IRS in addressing the tax issues related to the floating NAV reform." He also cited, "7. Data Plays an Important Role in Developing Policy and Regulations. The SEC of 2014 is an agency that increasingly relies on technology and specialized expertise. We recognize that the innovative use of data and analytical tools contributes to our ability to make better and more informed policy recommendations and enhances our investor protection efforts. The recent Money Market reforms are an excellent example of the importance of data. As you know, the failure of the Reserve Primary money market fund and the associated heavy redemptions from other money markets funds during the 2008 financial crisis prompted us to revisit the way money market funds are regulated. In 2009, the Commission proposed the first set of money market reforms, and final rule amendments were adopted in 2010. Following the adoption of these initial reforms, Commission staff continued to monitor and study money market funds. In November 2012, the SEC's Division of Economic and Risk Analysis delivered an extensive economic study to the Commission addressing a series of Commissioner questions about money market mutual funds. Less than a year later, in June of 2013, the Commission proposed additional money market fund reforms based on this study, and the additional reforms were successfully adopted in July of this year. The data-based economic studies and analysis that DERA provided throughout the rulemaking process were essential in formulating these final reforms. The Commission has also benefitted greatly from the monthly data that Form N-MFP provides us about money market fund holdings, which was the result of the 2010 money market mutual fund reforms. For example, the enforcement action against Ambassador Capital Management last year stemmed from an ongoing analysis of money market fund data by IM staff that involved a review of the gross yield of funds as a marker of risk." And, finally, Champ includes: "3. Open Communication with the Industry and the Public is Imperative. Another important avenue of communication is the public comments that we receive from investors, industry participants, and other parties in response to proposed regulatory initiatives. These comments provide invaluable information and insight, which help inform our recommendations to the Commission. In connection with the recent money market reforms, the Division received more than 1,400 comments. Division staff carefully considered the views expressed and the data put forth by all the commenters before formulating their recommendation for the final money market rule amendments and, as a result, the SEC's rulemaking process was greatly enhanced." In other news, Reuters writes, "U.S. Fed awards $50 bln 21-day Term Reverse Repos" and the Global Post writes, "U.S. Money Funds' Stake in U.S. Treasuries Fall: JP Morgan".
