New SEC Money Market Fund Reforms
July 28, 2014 – Update
The Securities and Exchange Commission (SEC) adopted rule changes on July 23 designed to make money market funds more resilient for investors. These rules, where applicable, will be implemented over the next two years. There is no immediate change to money market fund regulations or to our money market funds.
The new rules, built upon reforms adopted in 2010,* state:
- Institutional prime money market funds must move to a floating net asset value (NAV). This allows the daily share prices of these funds to fluctuate along with changes in the market.
- Money market funds may suspend redemptions for a period of 10 days and apply redemption fees to prevent a run on the fund(s). These are referred to in the rules as redemption gates and liquidity fees.
The chart below outlines potential impacts to our money market funds.
Money Market Fund
|Floating NAV||Redemption Gates &
|Capital Preservation Fund||Exempt from new floating NAV requirements – This fund invests at least 99.5% in U.S. government securities and cash. We anticipate that the fund will continue to maintain a stable $1 NAV.||Exempt from new regulation requiring mandatory imposition of liquidity fees –The fund’s board may impose discretionary redemption gates and/or liquidity fees in times of severe market stress.|
Prime Money Market Fund
Premium Money Market Fund
Tax-Free Money Market Fund
California Tax-Free Money Market Fund
|No immediate impact to these funds – We are currently evaluating the application of the rules. If changes are needed, we will communicate promptly as needed.||Subject to the mandatory 1% liquidity fee – This fee is only required in the most severe circumstances. The funds’ board would have the option to impose discretionary redemption gates and/or liquidity fees in times of severe market stress.|
What you can expect
We are currently analyzing the impact of the new requirements and will provide information to clients very soon. If any product changes are required, they will be promptly communicated well in advance of their effective date to allow time for consideration and planning.
*In March 2010, the SEC set daily and weekly liquidity requirements designed to make all money funds more resilient to investor redemptions. We track and monitor these levels carefully on a daily basis. The recent rule changes are intended by the SEC to further enhance the resiliency of money market funds by giving them additional tools to safeguard the funds’ liquid assets.
July 23, 2014
The Securities and Exchange Commission (SEC) voted today and passed reforms that will change how some money market funds operate. These reforms will be phased in over the next couple of years.
Your money market account is not subject to the reforms at this time.
We are reviewing the new regulations now and will keep you updated as we determine what this means to money market products and your account(s).
We've fully implemented previous reforms seeking to protect money market shareholders and are committed to always acting in your best interest. Since introducing the oldest Treasury money market fund more than 40 years ago, we've managed our money market funds using a disciplined investment process and stringent credit standards.
Check back on americancentury.com for the latest information from us. Also, you can find specifics about the reforms at sec.gov.