Friday, October 24, 2008

More No-Action Relief for Money Market Funds

The SEC Staff has issued yet another no-action letter granting relief for money market funds wishing to participate in the Federal Reserve and Treasury's liquidity measures aimed at money market funds.  This latest letter concerns money market funds' sales of securities to special purpose vehicles (SPVs) that are primarily funded by the Federal Reserve's Money Market Investor Funding Facility (MMIFF), a program announced on Tuesday, October 21

The no-action letter addresses the operation of the diversification requirements of Rule 2a-7 under the Investment Company Act with respect to instruments called "Commercial Paper Notes" to be used by the SPVs as part of the purchase price of certain qualified assets from participating money market mutual funds. The no-action letter also provides additional details on the operation of the SPVs.

John Baker has posted an extremely helpful summary of the details of this somewhat technical no-action position at his FundLaw group:

The full text of the no-action letter is available at: