First American Funds Managing Director Lisa Isaacson published commentary on Form N-CR entitled, "The First Money Market Fund Reform Deliverable." She writes, "The SEC's stated objectives when they announced money market fund reform were to increase transparency, address susceptibility to runs and preserve the benefits of money market funds. The purpose of the July deliverable is to increase transparency of material events that may befall a fund. The requirement goes live July 14 and it calls for funds to file a new material events form, called Form N-CR, in certain well-defined instances. Form N-CR will be required to be filed by funds with the SEC and prominently displayed on fund websites when specific events occur. The events which will trigger the filing of the form are detailed below, with the final one not required to be reported until that piece of the reform becomes effective: Insolvency or default of a portfolio holding. For issuers or guarantors representing 0.50% or more of a fund's holdings, a default or insolvency becomes a reportable event. Several pieces of information about the holding(s) would be disclosed in this event, including the default date, the value of the holding, the percentage of the portfolio it represents and what fund management is planning to do to address the issue.... Financial support from a sponsor. The idea of support is not new to money market funds, nor is the reporting of it. Sponsor support has historically been given to allow a fund to continue accepting redemption requests at a $1.00 NAV. Under certain circumstances, a sponsor may step in if a portfolio security has lost value or liquidity in the market has been compromised. Support can take several forms, including purchasing a distressed security from a fund at par, making a capital contribution or executing a capital support agreement on behalf of the fund. The SEC sees all of these actions as a sponsor taking steps to stabilize or increase the value or liquidity of a fund's portfolio.... Declines in a fund's shadow price. The new reform calls for a Form N-CR to be filed if a fund's shadow price falls below $0.9975 per share regardless of whether a fund will be pricing at a stable or a floating NAV come October 2016. Funds with shadow prices below $0.9975 are moving the wrong way within the current penny-rounding rules, which allow a money market fund to strike a $1.00 NAV if the value of portfolio securities is at least $0.9950 (NAVs below $0.9950 are considered to have broken the buck).... Imposition or lifting of a liquidity fee or redemption gate. Part of the ultimate reform implementation calls for fund boards to be able to assess a liquidity fee or a redemption gate if a fund's weekly liquidity falls below 30%. Should a board determine one or both of these levers is in the best interest of shareholders, the SEC has mandated that communication of such action be made public within one day through a Form N-CR filing. As part of the explanation included in these filings, a fund board will be able to provide context around why the decision was made.... It is important to note that all money market funds -- whether they are retail or institutional -- are subject to the July Form N-CR deliverable."

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