[Federal Register Volume 85, Number 58 (Wednesday, March 25, 2020)]
[Rules and Regulations]
[Pages 16887-16888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06286]



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 Rules and Regulations
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
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  Federal Register / Vol. 85, No. 58 / Wednesday, March 25, 2020 / 
Rules and Regulations  

[[Page 16887]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 9


Order of Temporary Extension of Maturity Limits for Short-Term 
Investment Funds

AGENCY: Office of the Comptroller of the Currency, Department of 
Treasury.

ACTION: Order of temporary extension of maturity limits for short-term 
investment funds.

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SUMMARY: The OCC has adopted an interim final rule adding a reservation 
of authority provision to the OCC's short-term investment fund (STIF) 
rule (STIF Rule) for national banks acting in a fiduciary capacity. The 
reservation of authority addresses the STIF Rule's limits on weighted 
average portfolio maturity, weighted average portfolio life maturity, 
and the method for determining those limits. The OCC has also issued an 
administrative order pursuant to the reservation of authority contained 
in the interim final rule. The order states that banks seeking to 
comply with the STIF Rule's portfolio maturity and life limits will be 
deemed to be in compliance with those requirements, if the STIF 
maintains a dollar-weighted average portfolio maturity of 120 days or 
less, and the STIF maintains a dollar-weighted average portfolio life 
maturity of 180 days or less.

DATES: The administrative order is effective March 23, 2020, and is 
applicable beginning March 21, 2020.

FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset 
Management Policy, Market Risk Policy Division, Bank Supervision 
Policy, (202) 649-6401, Stephanie Boccio, Asset Management Lead Expert, 
Systemic Risk Identification Support and Specialty Supervision, (202) 
649-6397, or Jamey Basham, Assistant Director, Chief Counsel's Office, 
(202) 649-5490, for persons who are deaf or hearing impaired, TTY, 
(202) 649-5597, Office of the Comptroller of the Currency, 400 7th 
Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION: Section 9.18 of the OCC's regulations (12 
CFR 9.18) sets out regulatory requirements for certain bank-managed 
fiduciary investment funds that hold pooled assets which are funded 
through contributions by the fund's participants. For Short-term 
Investment Funds (STIFs) subject to Sec.  9.18, these requirements 
include Sec.  9.18(b)(4)(iii)(B), requiring the STIF to be operated 
pursuant to a written, board-approved plan under 12 CFR 9.18(b)(1) \1\ 
that requires the fund to maintain a dollar-weighted average portfolio 
maturity of 60 days or less and a dollar-weighted average portfolio 
life maturity of 120 days or less, as determined in the same manner as 
is required by the Securities and Exchange Commission pursuant to Rule 
2a-7 for money market mutual funds (17 CFR 270.2a-7).
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    \1\ Section 9.18(b)(a) also permits the written plan to be 
approved by a committee authorized by the board.
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    Pursuant to Sec.  9.18(b)(4)(iv), the OCC has reserved the 
authority to, among other things, issue an order temporarily extending 
these limits if the OCC determines the financial markets are in a 
period of market stress negatively affecting, on a temporary basis, the 
ability of banks to operate in compliance with the requirements of 
Sec.  9.18(b)(4)(iii)(B).
    Recent events have significantly and adversely impacted global 
financial markets, and the OCC is concerned about the potential effects 
on STIFs operated by national banks. The spread of the Coronavirus 
Disease 2019 (COVID-2019) has slowed economic activity in many 
countries, including the United States. Sudden disruptions in financial 
markets have put increasing liquidity pressure on money market mutual 
funds, as they have been faced with redemption requests from clients 
with immediate cash needs. The Board of Governor of the Federal Reserve 
System, with the approval of the Secretary of the Treasury, has 
authorized the Federal Reserve Bank of Boston to establish the Money 
Market Mutual Fund Liquidity Facility, pursuant to section 13(3) of the 
Federal Reserve Act,\2\ as a measure to ameliorate these liquidity 
pressures. Although STIFs do not serve the same broad investor market 
as MMMFs, the OCC remains concerned that, in light of the acute effects 
the COVID-2019 virus is triggering across the markets broadly, there 
may be elevated participation interest withdrawals for STIFs operated 
by national banks, notwithstanding these differences between STIFs and 
MMMFs. Regulatory authorities supervising other categories of banks 
operating STIFs--in accordance with the legal requirements governing 
those banks and incorporating the OCC's STIF rules as part of those 
requirements--have conveyed similar concerns to the OCC.
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    \2\ 12 U.S.C. 343(3).
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    In addition to the OCC's concerns about unusual withdrawal levels, 
the OCC observes that STIF investment portfolios are generally made up 
of the same types of securities and investments as those held by MMMFs. 
Accordingly, liquidity pressures related to the COVID-2019 virus in the 
marketplace for those assets raises similar concerns for STIFs as those 
presented for MMMFs. Acute market-wide disturbances in the depth of 
liquidity available for a bank seeking to purchase and sell portfolio 
assets to maintain a STIF's liquidity put pressure on the bank's 
ability to perform these functions.
    In light of these reasons and pursuant to Sec.  9.18(b)(4)(iv), the 
OCC hereby determines that, effective immediately, banks seeking to 
comply with the requirements of section 9.18(b)(4)(iii)(B) will be 
deemed to be in compliance with that section if:
    1. The STIF maintains a dollar-weighted average portfolio maturity 
of 120 days or less, as determined in the same manner as is required by 
the Securities and Exchange Commission pursuant to Rule 2a-7 for money 
market mutual funds (17 CFR 270.2a-7);
    2. The STIF maintains a dollar-weighted average portfolio life 
maturity of 180 days or less, as determined in the same manner as is 
required by the Securities and Exchange Commission pursuant to Rule 2a-
7 for money market mutual funds (17 CFR 270.2a-7);
    3. The bank makes a determination that using these temporary limits 
would be in the best interests of the STIF under applicable law. This 
determination may

[[Page 16888]]

be made under the bank's standard procedures for making such 
determinations in regards to the best interests of its collective 
investment funds; and
    4. The bank must make any necessary amendments to the written plan 
for the STIF to reflect these temporary changes.
    5. The OCC also hereby determines that the relief provided by this 
administrative order terminates on July 20, 2020, unless the OCC 
revises this order to provide otherwise before that date.

    By authority of the Comptroller of the Currency.

    Dated: March 21, 2020.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
[FR Doc. 2020-06286 Filed 3-23-20; 11:15 am]
 BILLING CODE 4810-01-P