Following last Wednesday's open meeting, the SEC has now posted its "`References to Ratings of Nationally Recognized Statistical Rating Organizations" on the "Proposed Rules" page of its website. As we discussed in June 24 and June 25 Crane Data News articles ("SEC Proposes 'Alternate Path' to Reduce Ratings Reliance in Rule 2a-7" and "SEC to Propose Removing Ratings Agency Requirements of Rule 2a-7"), the SEC, "propose[s] to eliminate references to ratings by amending rule 2a-7 in four principal ways. In combination, these proposed amendments are designed to offer similar protections to the current rule's reliance on NRSRO ratings. The proposal summarizes 2a-7 and says, "Under the proposed amendments, we would rely on money market fund boards of directors to determine that each portfolio instrument presents minimal credit risks, and whether the security is a 'First Tier Security' or a 'Second Tier Security' for purposes of the rule. We believe that money market fund boards of directors would still be able to use quality determinations prepared by outside sources, including NRSRO ratings that they conclude are credible, in making credit risk determinations."
