Consumer Financial Choice and Capital Markets Protection Act of 2021
Bill: S.2684 | Sponsor: Sen. Toomey, Patrick (R-PA)
Policy area: Finance and Financial Sector

Summary:
Consumer Financial Choice and Capital Markets Protection Act of 2021
This bill allows a money market fund, under specified conditions, to elect to operate using a different method of valuation than is otherwise required. A money market fund that elects to do so shall not be subject to specified requirements related to the imposition of liquidity fees. (A money market fund is a type of mutual fund that invests in liquid, short-term assets.)
Current law limits the provision of certain federal assistance directly to any money market fund. The bill requires disclosure of this limitation on federal assistance in a money market's advertising and sales literature.

To protect the investment choices of investors in the United States, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Financial Choice and 
Capital Markets Protection Act of 2021''.

SEC. 2. TREATMENT OF MONEY MARKET FUNDS UNDER THE INVESTMENT COMPANY 
              ACT OF 1940.

    The Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is 
amended by adding at the end the following:

``SEC. 66. MONEY MARKET FUNDS.

    ``(a) Definitions.--In this section--
            ``(1) the term `covered Federal assistance' means Federal 
        assistance used for the purpose of--
                    ``(A) making any loan to, or purchasing any stock, 
                equity interest, or debt obligation of, any money 
                market fund;
                    ``(B) guaranteeing any loan or debt issuance of any 
                money market fund; or
                    ``(C) entering into any assistance arrangement 
                (including tax breaks), loss sharing, or profit sharing 
                with any money market fund; and
            ``(2) the term `Federal assistance' means--
                    ``(A) insurance or guarantees by the Federal 
                Deposit Insurance Corporation;
                    ``(B) transactions involving the Secretary of the 
                Treasury; or
                    ``(C) the use of any advances from any Federal 
                Reserve credit facility or discount window that is not 
                part of a program or facility with broad-based 
                eligibility established in unusual or exigent 
                circumstances.
    ``(b) Election To Be a Stable Value Money Market Fund.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, any open-end investment company (or a separate 
        series thereof) that is a money market fund that relies on 
        section 270.2a-7 of title 17, Code of Federal Regulations, may, 
        in the prospectus included in its registration statement filed 
        under section 8 state that the company or series has elected to 
        compute the current price per share, for purposes of 
        distribution or redemption and repurchase, of any redeemable 
        security issued by the company or series by using the amortized 
        cost method of valuation, or the penny-rounding method of 
        pricing, regardless of whether its shareholders are limited to 
        natural persons, if--
                    ``(A) the objective or principal investment 
                strategy of the company or series is not inconsistent 
                with the generation of income and preservation of 
                capital through investment in short-term, high-quality 
                debt securities;
                    ``(B) the board of directors of the company or 
                series elects, on behalf of the company or series, to 
                maintain a stable net asset value per share or stable 
                price per share, by using the amortized cost valuation 
                method, as defined in section 270.2a-7(a) of title 17, 
                Code of Federal Regulations (or successor regulation), 
                or the penny-rounding pricing method, as defined in 
                section 270.2a-7(a) of title 17, Code of Federal 
                Regulations (or successor regulation), and the board of 
                directors of the company has determined, in good faith, 
                that--
                            ``(i) it is in the best interests of the 
                        company or series, and its shareholders, to do 
                        so; and
                            ``(ii) the money market fund will continue 
                        to use such method or methods only as long as 
                        the board of directors believes that the 
                        resulting share price fairly reflects the 
                        market-based net asset value per share of the 
                        company or series; and
                    ``(C) the company or series will comply with such 
                quality, maturity, diversification, liquidity, and 
                other requirements, including related procedural and 
                recordkeeping requirements, as the Commission, by rule 
                or regulation or order, may prescribe or has prescribed 
                as necessary or appropriate in the public interest or 
                for the protection of investors to the extent that such 
                requirements and provisions are not inconsistent with 
                this section.
            ``(2) Exemption from default liquidity fee requirements.--
        Notwithstanding section 270.2a-7 of title 17, Code of Federal 
        Regulations (or successor regulation), no company or series 
        that makes the election under paragraph (1) shall be subject to 
        the default liquidity fee requirements of section 270.2a-
        7(c)(2)(ii) of title 17, Code of Federal Regulations (or 
        successor regulation).
    ``(c) Prohibition Against Federal Government Bailouts of Money 
Market Funds.--Notwithstanding any other provision of law (including 
regulations), covered Federal assistance may not be provided directly 
to any money market fund.
    ``(d) Disclosure of the Prohibition Against Federal Government 
Bailouts of Money Market Funds.--
            ``(1) In general.--No principal underwriter of a redeemable 
        security issued by a money market fund nor any dealer shall 
        offer or sell any such security to any person unless the 
        prospectus of the money market fund and any advertising or 
        sales literature for such fund prominently discloses the 
        prohibition against direct covered Federal assistance as 
        described in subsection (c).
            ``(2) Rules, regulations, and orders.--The Commission may, 
        after consultation with and taking into account the views of 
        the Board of Governors of the Federal Reserve System, the 
        Federal Deposit Insurance Corporation, and the Department of 
        the Treasury, adopt rules and regulations and issue orders 
        consistent with the protection of investors, prescribing the 
        manner in which the disclosure under this subsection shall be 
        provided.
    ``(e) Continuing Obligation To Meet Requirements of This Title.--A 
company or series that makes an election under subsection (b)(1) shall 
remain subject to the provisions of this title and the rules and 
regulations of the Commission thereunder that would otherwise apply if 
those provisions do not conflict with the provisions of this 
section.''.
                                 <all>