SEC Removes References to Credit Ratings in Money Market Fund Rule and Form

In a final rule, the SEC adopted amendments removing references to credit ratings in (i) Investment Company Act Rule 2a-7 ("Money Market Funds") and (ii) SEC Form N-MFP, which is used by money-market funds to report information to the SEC on portfolio holdings. The SEC also adopted amendments to the issuer diversification provisions in Rule 2a-7 to eliminate an exclusion that is available currently for securities, subject to a guarantee issued by a "non-controlled" person. The rule will be effective thirty days from the date it is published in the Federal Register.

The amendments will implement Section 939A ("Removal of Statutory References to Credit Ratings") of the Dodd-Frank Act, which requires the SEC to "review its rules that use credit ratings as an assessment of credit-worthiness and replace those credit-rating references with other appropriate standards." The SEC reported that it has now removed references to credit ratings from 32 rules and forms.