SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Money Market Fund Parity Act of 
2007''.

SEC. 2. MODERNIZATION OF S.E.C. BROKER-DEALER FINANCING RULES.

    (a) Rule Revision Required.--Not later than 90 days after the date 
of enactment of this Act, the Securities and Exchange Commission, 
pursuant to its authority under section 15(c) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o(c)(3)), shall revise Rules 15c3-1, 
15c3-3, and 15c2-4 (17 C.F.R. 240.15c3-1, 240.15c3-3, 240.15c2-4) to 
provide for the comparable treatment of securities issued by qualified 
money market funds with the treatment of other low-risk securities and 
deposits under such rules, and the expanded use of securities issued by 
qualified money market funds for financing by brokers and dealers.
    (b) Required Revisions.--In making the revisions required by 
subsection (a), the Commission shall revise the requirements--
            (1) under Rule 15c3-1 relating to net capital, by not 
        requiring, in the computation of net capital (or any other 
        capital requirement based on value-at-risk or similar financial 
        models or systems) any deduction for assets of the broker or 
        dealer invested in redeemable securities issued by one or more 
        qualified money market funds;
            (2) under Rule 15c3-3 relating to custody and use of 
        customers' securities--
                    (A) to permit a broker or dealer to use redeemable 
                securities issued by one or more qualified money market 
                funds as collateral in complying with any requirement 
                regarding physical possession or control of fully-paid 
                or excess margin securities borrowed from any person 
                under terms no less favorable than the treatment 
                afforded to any other collateral that the Commission 
                permits under Rule 15c3-3(b)(3)(iii)(A) (17 C.F.R. 
                240.15c3-3(b)(3)(iii)(A)) or any successor rule, or by 
                order; and
                    (B) to permit a broker or dealer to--
                            (i) deposit redeemable securities issued by 
                        one or more qualified money market funds in any 
                        required special reserve account under terms no 
                        less favorable than the treatment afforded to 
                        any other qualified security (as such term is 
                        defined in Rule 15c3-3(a)(6) (17 C.F.R. 
                        240.15c3-3(a)(6)) or any successor rule) or by 
                        order; and
                            (ii) post as collateral or deposit in any 
                        required special reserve account redeemable 
                        securities issued by one or more qualified 
                        money market funds by pledging such securities 
                        through the facilities of a clearing agency 
                        registered under section 17A(b) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 78q-
                        1(b)); and
            (3) under Rule 15c2-4 in connection with the underwritings 
        to which Rule 15c2-4(b) applies--
                    (A) permit a broker or dealer that has obtained 
                funds through the underwriting or distribution of 
                securities--
                            (i) to invest such obtained funds pending 
                        the specified event or contingency in 
                        redeemable securities issued by one or more 
                        qualified money market funds and to deposit 
                        such obtained funds or redeemable securities in 
                        a separate bank account; and
                            (ii) to transmit such obtained funds to a 
                        bank that has agreed to hold such obtained 
                        funds in escrow; and
                    (B) permit the bank to which such obtained funds 
                are transmitted pursuant to subparagraph (A)(ii) to 
                invest such obtained funds pending the specified event 
                or contingency in redeemable securities issued by one 
                or more qualified money market funds; and
                    (C) for the purposes of subparagraphs (A) and (B), 
                permit the broker, dealer, or bank to invest, redeem, 
                pledge, or receive the pledge of such obtained funds or 
                such redeemable securities through the facilities of a 
                clearing agency registered under section 17A(b) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78q-1(b)).
    (c) Definition of Qualified Money Market Fund.--For purposes of the 
rule revisions required under this Act, the term ``qualified money 
market fund'' shall be defined by the Commission in such rule 
revisions, but shall include any open-end management company registered 
under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-
8)--
            (1) which is generally known as a ``money market fund'';
            (2) which has received the highest money market fund rating 
        from a nationally recognized statistical rating organization;
            (3) which has agreed to redeem fund shares in cash, with 
        payment being made no later than the business day following a 
        redemption request by a shareholder (except in the event of an 
        unscheduled closing of Federal Reserve Banks or the unscheduled 
        closing of one or more national securities exchanges registered 
        under section 6 of this title (15 U.S.C. 78f); and
            (4) which has adopted a policy to notify its shareholders 
        of--
                    (A) any change in its rating not later than 30 days 
                after the effective date of such change; and
                    (B) any change in its policy to redeem fund shares 
                in cash no later than the business day following a 
                redemption request by a shareholder as required by 
                paragraph (3), not less than 60 days prior to such 
                change taking effect (except in the event of an 
                unscheduled closing of Federal Reserve Banks or the 
                unscheduled closing of one or more national securities 
                exchanges registered under section 6 of this title (15 
                U.S.C. 78f)).
Money Market Fund Parity Act of 2007 - Directs the Securities and Exchange Commission to revise, according to specified requirements, rules relating to net capital, custody and use of customers' securities, and certain underwritings to provide for: (1) treatment of securities issued by qualified money market funds comparable with the treatment under those rules of other low-risk securities and deposits; and (2) the expanded use of securities issued by qualified money market funds for financing by brokers and dealers.
To direct the Securities and Exchange Commission to revise rules to provide for the comparable treatment and expanded use of qualified money market funds for broker-dealer financing.