The Securities and Exchange Commission has given money market funds a reprieve from following an amendment to money market fund regulations requiring them to approve of the credit rating agencies they must use to determine whether a security is eligible for investment.

Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act required the SEC to review the regulations that reference credit ratings and to modify regulations the Commission has identified to remove any requirement that funds rely on credit ratings. In the agencies place was to come “a standard of creditworthiness the commission determines appropriate.”

In an Aug. 19 letter to the Investment Company Institute, the SEC said that Section 939A of the reform bill would have overridden one amendment to Rule 2a7 of the Investment Company Act of 1940. That amendment adopted in January 2010 was one that said the boards of money market funds must designate at least four nationally recognized statistical rating organizations (NRSROs), whose ratings they could use to determine the eligibility of portfolio securities. Because the funds needed to disclose the names of those NRSROs in their SAI by Dec. 31, they would likely have to come up with the names of the four NRSROs this fall

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