On March 22, 2020, the United States Office of the Comptroller of the Currency (OCC) announced an interim final rule effective immediately to revise its short-term investment fund (STIF) rule for national banks acting in a fiduciary capacity.1 The amendment allows the OCC to authorize banks to temporarily extend maturity limits of STIFs in order to address the market stress caused by the COVID-19 outbreak that is adversely affecting banks' ability to operate in compliance with maturity limits identified in the STIF rule. While the amendment directly applies to national banks, other managers of STIF may be indirectly affected.2
In connection with the announcement of the interim final rule, the OCC announced an order, effecting the amendment to the STIF rule, to extend maturity limits for STIFs affected by COVID-19.3 Pursuant to the order, a bank will be deemed to be in compliance with the STIF rule if:
- The STIF maintains a dollar-weighted average portfolio maturity of 120 days or less, as determined in the same manner as is required by Rule 2a-7 under the Investment Company Act of 1940 (1940 Act)4 for money market mutual funds;5
- 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 Rule 2a-7;6
- The bank is acting in the best interests of the STIF under applicable law in connection with using these temporary limits; and
- The bank makes any necessary amendments to the written plan for the STIF to reflect these temporary changes.
The relief provided by the order will terminate on July 20, 2020 unless otherwise revised to terminate before that date. The amendment to the STIF rule will remain in effect, and therefore, could act as the authority to extend the order's termination date.
1. 85 Fed. Reg. 16,887 (Mar. 25, 2020) (amending 12 C.F.R. § 9.18).
2. See, e.g., 26 U.S.C. § 584 (requiring any STIF to comply with the OCC's regulations as a condition of maintaining tax-exempt status).
3. Order of Temporary Extension of Maturity Limits for Short-term Investment Funds, Office of the Comptroller of the Currency (Mar. 22, 2020), available at https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-38.html.
4. 17 C.F.R. § 270.2a-7.
5. As compared to a dollar-weighted average portfolio maturity of 60 days or less. See 12 C.F.R. § 9.18(b)(4)(iii)(B).
6. As compared to a dollar-weighted average portfolio life maturity of 120 days or less. See 12 C.F.R. § 9.18(b)(4)(iii)(B).
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