FR 2021-01666

The document is a notice from the Securities and Exchange Commission (SEC) announcing their request for an extension from the Office of Management and Budget (OMB) to continue collecting information under Rule 30b1-8 and Form N-CR. This rule mandates that money market funds notify the SEC about significant events, which enables better oversight and more informed investors. This notice invites public comments on this information collection within a 30-day period following the notice's publication.

General Summary

The SEC seeks to extend permission for collecting information required by Rule 30b1-8 and Form N-CR, crucial for monitoring money market funds. This is part of the SEC's regulatory framework to enhance transparency and market stability. The rule demands that when a money market fund experiences particular events, it must file a report within a specific timeframe. There are typically about six such reports filed annually, with an estimated preparation time of 8.5 hours and a cost of $1,018.5 each.

Significant Issues or Concerns

There are several issues and concerns raised by the notice:

1. Imprecise Cost and Time Estimates: The document indicates estimates of the time and cost required to complete each report based on interactions with industry representatives. However, it does not specify how these conclusions were drawn, which leaves uncertainty about their accuracy.

2. Confidence in Estimates: Because the estimates do not rely on comprehensive or representative surveys, there's a risk of misestimating the actual burden on the industry. This could lead to challenges either for the SEC if reporting takes longer or costs more, or for the funds if the process is underestimated.

3. Confidentiality Concerns: The SEC makes it clear that responses to the form will not be confidential. This lack of privacy could deter some entities from full disclosure or might heighten concerns over proprietary information.

4. Complex Legal Language: The use of legal references like [17 CFR 270.30b1-8] without explanation might be off-putting for those not versed in legal jargon, limiting broader comprehension.

5. Complex Comment Submission: The detailed instructions for submitting comments may seem daunting to those unfamiliar with government processes, possibly diminishing stakeholder participation.

Impact on the Public

For the general public, especially investors in money market funds, this notice underscores the SEC's ongoing efforts to ensure transparency and safeguard investments through diligent oversight. Investors benefit from timely disclosures, giving them access to important information that might affect their investments.

Impact on Specific Stakeholders

• Fund Managers: For money market fund managers, the reporting requirements represent an operational requirement that might impact their time and financial resources. While the process is integral to maintaining market integrity, it necessitates a well-organized compliance system within these funds.

• Regulatory Bodies: For the SEC, continued information collection allows for more informed regulatory responses and policy development. This could lead to more effective oversight and potentially more swift and efficient responses to market events.

• Legal and Compliance Teams: Legal teams may need to spend additional time ensuring that complex filing requirements and legal references are understood and adhered to, which could lead to an increased demand for legal support services.

In summary, while the intended extension of the information collection aids regulatory oversight and investment transparency, the document reveals areas needing clarity in cost estimates and confidentiality in reporting that could potentially impact both industry participants and investors.

In examining the financial references within the document, there are a few key aspects to highlight. The primary financial component involves the burden associated with the filing of Form N-CR, which is required for money market funds under specific regulatory conditions.

The document states that filing each report imposes an estimated burden of approximately 8.5 hours and $1,018.50. Given there are an estimated six reports filed annually, this results in a total burden of 51 hours and $19,839 per year for the entire process. These figures encapsulate the cost and time investment required from entities involved in this regulatory compliance.

One significant issue raised by the financial references is the lack of clarity in how these estimates were derived. The document mentions that these estimates are based on "communications with industry representatives," yet no specific details about these communications are provided. Without comprehensive or representative surveys or studies, there remains a possibility of inaccuracies in these estimates. This could lead to either an underestimate or overestimate of the actual burden on the industry.

Additionally, the financial burden described does not engage with any potential economic impacts that non-confidential information requirements could have on the filers. Since responses will not be confidential, concerns might arise about the sensitivity of the information disclosed and whether this could impact competitive positions or proprietary interests in the industry.

Furthermore, the document's use of legal jargon and references may obscure understanding for some audiences unfamiliar with securities law. This applies to the financial aspects and broader information, possibly acting as a barrier for some stakeholders who might have valuable input or feedback concerning the financial burdens described.

Overall, while the document outlines the expected costs and time commitments for money market funds filing Form N-CR, additional transparency in the derivation of cost estimates and mindful consideration of confidentiality could enhance stakeholder engagement and trust.