A press release sent out last week entitled, "SEC Issues Annual Staff Reports on Credit Rating Agencies," says, "The Securities and Exchange Commission today issued its two annual staff reports on credit rating agencies registered as nationally recognized statistical rating organizations (NRSROs). The reports show that NRSROs have made operational improvements and have enhanced process accountability, controls and governance, and that smaller NRSROs have made competitive inroads in certain rating categories ." "These reports demonstrate the SEC's vigilant oversight of the credit rating industry," said Chair Mary Jo White. "The staff's continued efforts are yielding valuable results as we are seeing improvements in the overall compliance cultures at many of the credit rating agencies." The report that the release cites, "Annual Report on Nationally Recognized Statistical Rating Organizations," includes a section on money market reforms as it relates to credit ratings. Page 5 of the 35-page report says, "Final Rule: Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule, Release No. IC-31828 (Sept. 16, 2015), 80 FR 58124 (Sept. 25, 2015). The Commission adopted amendments to address provisions that reference credit ratings in Rule 2a-7 and Form N-MFP, under the Investment Company Act of 1940. Specifically, the amendments to Rule 2a-7 replace references to credit ratings in the rule with alternative standards designed to maintain a similar level of credit quality as under the rule prior to the amendments. The amendments to Form N-MFP require that a fund disclose any credit rating that the fund's board considered in determining the credit quality of a portfolio security. The amendments were adopted pursuant to Section 939A of the Dodd-Frank Act, and finalize the re-proposed rule described below." It continues, "Re-Proposed Rule: Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule, Release No. IC-31184 (July 23, 2014), 79 FR 47985 (Aug. 14, 2014). The Commission re-proposed amendments to address provisions that reference credit ratings in Rule 2a-7 and Form N-MFP, under the Investment Company Act of 1940. Specifically, the proposed amendments to Rule 2a-7 would replace references to credit ratings in the rule with alternative standards designed to maintain a similar level of credit quality as under the rule prior to the amendments. The proposed amendments to Form N-MFP would require that a fund disclose any credit rating that the fund's board considered in determining the credit quality of a portfolio security. The amendments were proposed pursuant to Section 939A of the Dodd-Frank Act." (For more, see our Sept. 18, 2015 News, "SEC Removes References to Credit Ratings in Final Money Fund Rules," and our July 24, 2014 News, "SEC Adopts MMF Reforms; Chair White on Rule's Fundamental Changes.")

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