October 1, 2016
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In October 2016, Fidelity completed its implementation of comprehensive U.S. Securities and Exchange Commission (SEC) rules for further regulation of money market mutual funds.
The rule changes are intended to give investors more transparency on a daily basis and additional protection during rare periods of market stress, when redemptions in some money market mutual funds may increase significantly.
The rule changes include new definitions for government funds and retail funds, which continue to be eligible to transact at a stable $1.00 net asset value (NAV) or price per share.
Under the new rules, institutional prime (general purpose) and institutional municipal money market mutual funds—those primarily held by institutional investors rather than individuals—are required to price and transact at a "floating" NAV.
During periods of extraordinary market stress, institutional and retail prime and municipal funds will have the ability to charge liquidity fees, payable to the funds upon redemption, or temporarily halt redemptions by applying redemption "gates."
Our options for direct investors
- Government and U.S. Treasury money market funds
- Continue to be available to both retail and institutional investors
- Continue transacting at a stable $1.00 net asset value (NAV) for both retail and institutional investors
All of Fidelity's Government and U.S. Treasury money market funds are exempt from redemption restrictions.
- Retail money market funds (prime and municipal)
- Available to "natural persons" investors, including those who invest through brokerage accounts, defined contribution retirement plans, college savings plans, and many trusts
- Able to continue transacting at a stable $1.00 NAV
- May impose redemption restrictions if fund liquidity falls below regulatory limits
- Options for institutional investors
- Options include government money market funds
- As well as institutional prime funds
- Institutional money market funds are subject to a floating NAV and may impose redemption restrictions if fund liquidity falls below regulatory limits