On July 12, 2023, the SEC voted three to two along party lines to approve a final rule making significant updates to requirements for money market funds (MMFs) and large liquidity advisers. Highlights include:
- Increase minimum daily and weekly liquidity requirements to 25% and 50%
- Remove provisions on redemption gates and decouple the imposition of liquidity fees from a fund’s liquidity level
- In the most significant change from the proposal, the SEC backed away from swing pricing and instead will require institutional prime and tax-exempt MMFs to impose redemption fees. Non-government MMFs could impose a discretionary liquidity fee with board approval.
- Additional reporting requirements for large liquidity fund advisers
- Specific guidance for a negative interest rate environment
This article provides details on the updates and an appendix that summarizes the changes.
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