How are money market funds regulated, and how do money market funds seek to maintain a stable $1.00 net asset value?
Money market funds are strictly regulated by the SEC, both as mutual funds generally and pursuant to Rule 2a-7 under the Investment Company Act of 1940. Rule 2a-7 includes several conditions intended to help a fund stabilize its share price at $1.00. These conditions limit risk in a money market fund’s portfolio by governing the credit quality, liquidity, diversification, and maturity of money market fund investments. • Credit Quality: Money market funds are required to hold high-quality securities that pose minimal credit risks and have received ratings in the top two categories from two nationally recognized statistical rating organizations (NRSROs) (unless only one NRSRO rates the security or issuer of debt), or are securities of comparable quality. At least 97 percent of a money market fund’s assets must be invested in securities that received the highest short-term rating or securities of comparable quality (known as “First Tier Securities”). • Liquidity: Money market funds must m
Money market funds are strictly regulated by the SEC, both as mutual funds generally and pursuant to Rule 2a-7 under the Investment Company Act of 1940. Rule 2a-7 includes several conditions intended to help a fund stabilize its share price at $1.00. These conditions limit risk in a money market fund’s portfolio by governing the credit quality, liquidity, diversification, and maturity of money market fund investments. • Credit Quality: Money market funds are required to hold high-quality securities that pose minimal credit risks and have received ratings in the top two categories from two nationally-recognized statistical rating organizations (NRSROs) (unless only one NRSRO rates the security or issuer of debt), or are securities of comparable quality. At least 97 percent of a money market fund’s assets must be invested in securities that receive the highest short-term rating or securities of comparable quality (known as “First Tier Securities”). • Liquidity: Money market funds must ma
