Global Liquidity money market reform conference call replay

Aug. 12, 2014 | By Global Liquidity

Head Portfolio Manager, Esther Chance and Head Credit Analyst Justo Gonzalez discuss the SEC's new money market fund regulations and their implications for investors.

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Important information

SEC = Securities and Exchange Commission

NAV = Net asset value

NRSROs = Nationally Recognized Statistical Rating Organizations

Amortized Cost Method/Penny Rounding Method = Pursuant to SEC Rule 2a-7, the Funds use the amortized cost method of accounting, rounded to the nearest cent, to value their securities when calculating their net asset value for purposes of all Portfolio share transactions.

First Tier = An eligible money market security which receives the top short-term rating from any two Nationally Recognized Statistical Rating Organizations (NRSROs). If only one NRSRO has rated the security, it must receive the highest short-term rating from that NRSRO to be considered First Tier. U.S. Government Securities are considered First Tier Securities.

Second Tier = An eligible money market security which is not a First Tier security and receives one of the top two short-term ratings from any two NRSROs. If only one NRSRO has rated the security, it must receive the second highest short-term rating from that NRSRO to be considered Second Tier.

Rule 2a-7 of the Investment Company Act of 1940, which governs money market funds, will be amended to define a "retail money market fund" as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. In its release accompanying the final rules, the SEC states that money market funds will have flexibility in how they choose to comply with the natural person test, including developing policies and procedures that best suit a fund's investor base. The SEC expects that many funds will rely on social security numbers to confirm beneficial ownership by a natural person; however a money market fund or the appropriate intermediary could determine the beneficial ownership of a non-US natural person by obtaining other government-issued identification, for example, a passport. Retail money market funds will also develop policies and procedures in order to determine that underlying beneficial owners of omnibus accounts are natural persons.

The opinions expressed herein are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Diversification does not guarantee a profit or eliminate the risk of loss.