ICI Supports Amendments to Financial Responsibility Rules for Broker-Dealers
Washington, DC, June 18, 2007 - The Investment Company Institute supports the SEC’s proposal to expand the use of money market funds under the SEC’s broker-dealer financial responsibility rules.
In March 2007, the Commission requested comment on proposed amendments to the Commission’s net capital, customer protection, books and records, and notification rules for broker-dealers under the Exchange Act. Specifically, the proposed amendments are designed to address several emerging areas of concern regarding the financial requirements for broker-dealers. They also would update the financial responsibility rules and make certain technical amendments.
The Institute supports the SEC’s amendments and, in particular, strongly supports the proposal to extend to a broker-dealer’s investments in shares of certain types of money market funds equivalent treatment to their direct investments in U.S. Treasury securities. In a recent comment letter, ICI recommends that such treatment be extended to money market funds that invest exclusively in “first tier” securities as defined in Rule 2a-7 under the Investment Company Act of 1940. ICI further recommends changes to the conditions to be considered a “qualified security” under the proposal. Finally, the Institute recommends that the haircut that broker-dealers would apply to proprietary positions in money market funds be reduced.