May 30, 2013
The Securities and Exchange Commission (SEC) has scheduled a meeting on June 5, 2013, to vote on proposing additional money market fund reforms. A majority of the SEC's five commissioners need to vote in favor of issuing the proposals. Previously, former SEC Chairman Mary Schapiro's attempt to secure a vote on additional money market reform in August 2012 was unsuccessful.
SEC Rule 2a-7 still governs and regulates US money market funds
Current requirements under SEC Rule 2a-7 continue to govern and regulate the investments of Invesco's money market shareholders at more vigorous levels than at any time since the industry's inception.
US money market funds have already implemented significant reforms focused on improved liquidity and credit quality as part of the amendments to Rule 2a-7 in 2010. Importantly, as a result of these reforms, money market funds are among the most transparent investment vehicles, with monthly holdings available publicly on a regular basis, so investors know what the funds hold and the quality of those holdings.
We believe these reforms have made the industry better positioned and more resilient to weather challenges such as the eurozone debt crisis and prolonged zero interest rate environment.
It's important to note that on June 5 SEC commissioners will vote on releasing draft proposals for comment. Should the SEC vote in favor of releasing the proposals, an extended public comment period would follow. At the end of the comment period and after a review of the comments submitted, the SEC would then have to vote again to implement the proposals. The process from adoption to implementation is expected to take several months or even years.
Invesco supports the goal of regulators to protect investors' interests, and we're receptive to proposed changes that preserve the key characteristics that have made money market funds so valuable to investors, issuers and the economy. However, proposed changes must preserve a competitive marketplace for funds and fund sponsors to ensure investors have a choice, and should not increase risks to the financial system by concentrating assets in a few large institutions and/or by driving assets into alternative products that are far less regulated and transparent.
As a leading independent global investment management firm with $729.3 billion1 of diversified assets under management as of March 30, 2013, Invesco pledges to continue to work with policymakers toward a viable solution that meets the needs of all stakeholders. We remain committed to the money market business and the pursuit of helping our clients meet their cash management needs. We are also committed to keeping you updated about ongoing events in this process.