Consumer Financial Choice and Capital Markets Protection Act of 2021
This bill allows a money market fund, under specified conditions, to elect to operate using a different method of valuation than is otherwise required. A money market fund that elects to do so shall not be subject to specified requirements related to the imposition of liquidity fees. (A money market fund is a type of mutual fund that invests in liquid, short-term assets.)
Current law limits the provision of certain federal assistance directly to any money market fund. The bill requires disclosure of this limitation on federal assistance in a money market's advertising and sales literature.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2684 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
1st Session
S. 2684
To protect the investment choices of investors in the United States,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 9, 2021
Mr. Toomey (for himself, Mr. Menendez, Mr. Rounds, and Mr. Peters)
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 investors in the United States,
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 2021''.
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-1 et seq.) is
amended by adding at the end the following:
``SEC. 66. MONEY MARKET FUNDS.
``(a) Definitions.--In this section--
``(1) the term `covered Federal assistance' means Federal
assistance used for the purpose of--
``(A) making any loan to, or purchasing any stock,
equity interest, or debt obligation of, any money
market fund;
``(B) guaranteeing any loan or debt issuance of any
money market fund; or
``(C) entering into any assistance arrangement
(including tax breaks), loss sharing, or profit sharing
with any money market fund; and
``(2) the term `Federal assistance' means--
``(A) insurance or guarantees by the Federal
Deposit Insurance Corporation;
``(B) transactions involving the Secretary of the
Treasury; or
``(C) 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.
``(b) Election To Be a Stable Value Money Market Fund.--
``(1) In general.--Notwithstanding any other provision of
this title, any open-end investment company (or a separate
series thereof) that is a money market fund that relies on
section 270.2a-7 of title 17, Code of Federal Regulations, may,
in the prospectus included in its registration statement filed
under section 8 state that the company or series has elected to
compute the current price per share, for purposes of
distribution or redemption and repurchase, of any redeemable
security issued by the company or series by 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--
``(A) the objective or principal investment
strategy of the company or series is not inconsistent
with the generation of income and preservation of
capital through investment in short-term, high-quality
debt securities;
``(B) the board of directors of the company or
series elects, on behalf of the company or series, to
maintain a stable net asset value per share or stable
price per share, by using the amortized cost valuation
method, as defined in section 270.2a-7(a) of title 17,
Code of Federal Regulations (or successor regulation),
or the penny-rounding pricing method, as defined in
section 270.2a-7(a) of title 17, Code of Federal
Regulations (or successor regulation), and the board of
directors of the company has determined, in good faith,
that--
``(i) it is in the best interests of the
company or series, and its shareholders, to do
so; and
``(ii) 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
``(C) the company or series will comply with such
quality, maturity, diversification, liquidity, and
other requirements, including related procedural and
recordkeeping requirements, 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.
``(2) Exemption from default liquidity fee requirements.--
Notwithstanding section 270.2a-7 of title 17, Code of Federal
Regulations (or successor regulation), no company or series
that makes the election under paragraph (1) shall be subject to
the default liquidity fee requirements of section 270.2a-
7(c)(2)(ii) of title 17, Code of Federal Regulations (or
successor regulation).
``(c) Prohibition Against Federal Government Bailouts of Money
Market Funds.--Notwithstanding any other provision of law (including
regulations), covered Federal assistance may not be provided directly
to any money market fund.
``(d) Disclosure of the Prohibition Against Federal Government
Bailouts of Money Market Funds.--
``(1) In general.--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 (c).
``(2) Rules, regulations, and orders.--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.
``(e) Continuing Obligation To Meet Requirements of This Title.--A
company or series that makes an election under subsection (b)(1) shall
remain subject to the provisions of this title and the rules and
regulations of the Commission thereunder that would otherwise apply if
those provisions do not conflict with the provisions of this
section.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line