JP Morgan has enhanced its offering of regulatory reporting services for money market funds (MMFs) to assist asset managers in complying with the SEC revised Rule 2a-7 requirements for higher credit quality, improved liquidity, and shorter maturity limits, including the calculation of the new weighted average life. JP Morgan is also prepared to help advisors meet enhanced disclosures of fund level, class level and security level data required in the new monthly public website posting and SEC Form N-MFP filing.
The revised SEC Rule 2a-7 also requires funds to establish procedures for stress testing, periodic testing of a funds ability to maintain a stable net asset value (NAV). JP Morgan’s services for MMFs features a suite of stress tests, including: an increase in short-term interest rates; an increase in shareholder redemptions; a downgrade of or default on portfolio securities; a widening or narrowing of spreads between yields on an appropriate benchmark selected by the fund for overnight interest rates and commercial paper and other types of securities held by the fund; and a combination of events.
JP Morgan is anticipating that it will offer additional stress test scenarios that can provide useful insight into how adverse market conditions can affect money market fund performance.
“The pressure on asset managers to keep pace with the rate and scope of regulatory changes, including Rule 2a-7 has been significant,” said Mark Kelley, asset gatherers segment executive for JP Morgan Worldwide Securities Services. “We believe we best serve our clients by responding quickly to these reforms, consulting with our clients to fully understand their needs, and providing timely and effective solutions.”
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