Consumer Financial Choice and Capital Markets Protection Act of 2015
This bill amends the Investment Company Act of 1940 to authorize any open-end investment company to elect, in its registration statement, to be a money market fund and to compute the current price per share, for purposes of distribution or redemption and repurchase, of any redeemable security issued by the company using the amortized cost method of valuation or the penny-rounding method of pricing, regardless of whether its shareholders are limited to natural persons, if:
The bill prohibits covered federal assistance from being provided directly to any money market fund. The bill defines: (1) "covered federal assistance " as federal assistance used for the purpose of making any loan to, or purchasing any stock, equity interest, or debt obligation of, any money market fund, guaranteeing any loan or debt issuance of any money market fund, or entering into any assistance arrangement, loss sharing, or profit sharing with any money market fund; and (2) "federal assistance" as insurance or guarantees by the Federal Deposit Insurance Corporation, transactions involving the Secretary of the Treasury, or the use of any advances from any Federal Reserve credit facility or discount window that is not part of a program or facility with broad-based eligibility established in unusual or exigent circumstances.
No principal underwriter of a redeemable security issued by a money market fund nor any dealer shall offer or sell any such security to any person unless the prospectus of the money market fund and any advertising or sales literature for such fund prominently discloses such prohibition against direct covered federal assistance.
A company that elects to be a money market fund shall remain subject to the provisions of this Act and SEC rules and regulations that would otherwise apply to a registered open-end company, if consistent with this Act.
[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1802 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 1802
To protect the investment choices of American investors, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 16, 2015
Mr. Toomey (for himself, Mr. Manchin, Mr. Crapo, and Mr. Menendez)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To protect the investment choices of American investors, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Consumer Financial Choice and
Capital Markets Protection Act of 2015''.
SEC. 2. TREATMENT OF MONEY MARKET FUNDS UNDER THE INVESTMENT COMPANY
ACT OF 1940.
The Investment Company Act of 1940 (15 U.S.C. 80a et seq.) is
amended by adding at the end the following:
``SEC. 66. MONEY MARKET FUNDS.
``(a) Election To Be Treated as Money Market Fund.--Notwithstanding
any other provision of this title, any open-end investment company (or
a separate series thereof) may elect, in its registration statement
filed under section 8, to be a money market fund and may compute the
current price per share, for purposes of distribution or redemption and
repurchase, of any redeemable security issued by the company using the
amortized cost method of valuation, or the penny-rounding method of
pricing, regardless of whether its shareholders are limited to natural
persons, if--
``(1) the company or series has as its objective the
generation of income and preservation of capital through
investment in short-term, high-quality debt securities;
``(2) if the company or series elects to maintain a stable
net asset value per share or stable price per share, by virtue
of the amortized cost valuation method, as that term is defined
in section 270.2a-7(a)(2) of title 17, Code of Federal
Regulations, as in effect on the date of enactment of this
section, and in accordance with the requirements specified with
respect to the use of the amortized cost valuation method as
set forth in that section, as in effect on the date of
enactment of this section, or the penny-rounding pricing
method, as that term is defined in section 270.2a-7(a)(21) of
title 17, Code of Federal Regulations, as in effect on the date
of enactment of this section, and in accordance with the
requirements specified with respect to the use of the penny-
rounding pricing method as set forth in that section, as in
effect on the date of enactment of this section, the board of
directors of the company has determined, in good faith, that--
``(A) it is in the best interests of the company or
series, and its shareholders, to do so; and
``(B) the money market fund will continue to use
such method or methods only as long as the board of
directors believes that the resulting share price
fairly reflects the market-based net asset value per
share of the company or series; and
``(3) the company or series agrees to comply with such
quality, maturity, diversification, and liquidity requirements,
including reasonable procedural and recordkeeping requirements
and provisions relating to liquidity fees and restrictions on
redemptions, as the Commission, by rule or regulation or order,
may prescribe or has prescribed as necessary or appropriate in
the public interest or for the protection of investors to the
extent that such requirements and provisions are not
inconsistent with this section.
``(b) Prohibition Against Federal Government Bailouts of Money
Market Funds.--
``(1) Definitions.--In this subsection--
``(A) the term `covered Federal assistance' means
Federal assistance used for the purpose of--
``(i) making any loan to, or purchasing any
stock, equity interest, or debt obligation of,
any money market fund;
``(ii) guaranteeing any loan or debt
issuance of any money market fund; or
``(iii) entering into any assistance
arrangement (including tax breaks), loss
sharing, or profit sharing with any money
market fund; and
``(B) the term `Federal assistance' means--
``(i) insurance or guarantees by the
Federal Deposit Insurance Corporation;
``(ii) transactions involving the Secretary
of the Treasury; or
``(iii) the use of any advances from any
Federal Reserve credit facility or discount
window that is not part of a program or
facility with broad-based eligibility
established in unusual or exigent
circumstances.
``(2) Prohibition.--Notwithstanding any other provision of
law (including regulations), covered Federal assistance may not
be provided directly to any money market fund.
``(c) Disclosure of the Prohibition Against Federal Government
Bailouts of Money Market Funds.--No principal underwriter of a
redeemable security issued by a money market fund nor any dealer shall
offer or sell any such security to any person unless the prospectus of
the money market fund and any advertising or sales literature for such
fund prominently discloses the prohibition against direct covered
Federal assistance as described in subsection (b). The Commission may,
after consultation with and taking into account the views of the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and the Department of the Treasury, adopt rules
and regulations, and issue orders consistent with the protection of
investors, prescribing the manner in which the disclosure under this
subsection shall be provided.
``(d) Continuing Obligation To Meet Requirements of This Title.--A
company that elects to be a money market fund in accordance with
subsection (a) or is otherwise a money market fund operating in
accordance with the rules and regulations of the Commission applicable
to money market funds shall remain subject to the provisions of this
title and the rules and regulations of the Commission thereunder that
would otherwise apply to a registered open-end company, as long as
those provisions do not conflict with the provisions of this
section.''.
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Introduced in Senate
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Committee on Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investment. Hearings held. With printed Hearing: S.Hrg. 114-388.
Committee on Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investment. Hearings held.
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