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Subject: Short-Term Investment Funds
Date: October 10, 2012
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Final Rule
The Office of the Comptroller of the Currency (OCC) published a final rule in the Federal Register on October 9, 2012, that revises the requirements imposed on U.S. banks and federal branches of foreign banks pursuant to 12 CFR 9.18(b)(4)(ii)(B), the short-term investment fund (STIF) rule.
A STIF is a type of collective investment fund (CIF) that operates pursuant to a plan that governs a bank’s management and administration of the fund. For admissions to and withdrawals from the fund, a bank may value STIF assets on an amortized cost basis, provided that the STIF plan includes certain requirements, rather than marking the assets to market, which is the valuation method required for other CIFs. Currently, a STIF plan must require the bank to: (1) maintain a dollar-weighted average portfolio maturity of 90 days or less, (2) accrue on a straight-line basis the difference between the cost and the anticipated principal receipt on maturity, and (3) hold the fund’s assets until maturity under usual circumstances.1
The final rule revises and adds to these requirements. Under the final rule, a STIF will be required to
The final rule applies directly to national banks and federal branches of foreign banks that act in a fiduciary capacity and manage a STIF. As a result of cross-references in the rules applicable to federal savings associations, the final rule also will apply indirectly to those institutions. Based on information reported as of June 30, 2012, however, no federal savings associations were managing STIFs.
The OCC will continue to evaluate the requirements of its STIF regulations in light of future policy assessments and initiatives concerning similar types of funds, such as money market mutual funds, and will take additional actions as appropriate.
The effective date of the final rule is July 1, 2013.
You may direct questions or comments to:
Daniel P. Stipano
Acting Chief Counsel