OCC Bulletin 2020-22| March 23, 2020

Short-Term Investment Funds: Interim Final Rule and Order

To

Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

The Office of the Comptroller of the Currency (OCC) announced an interim final rule (IFR) revising its short-term investment fund (STIF) rule for OCC-supervised banks1 acting in a fiduciary capacity.2 The IFR allows the OCC to authorize banks to temporarily extend maturity limits of these funds if the agency determines that sudden disruptions in the financial markets negatively affect the ability of banks to operate in compliance with maturity limits required by the STIF rule. Simultaneously, the OCC also announced an order (Order) temporarily extending the maturity limits for STIFs affected by the market effects of Coronavirus Disease (also referred to as COVID-19).

Note for Community Banks

This bulletin applies to all banks that operate STIFs.

Highlights

The IFR amends the STIF rule by adding a reservation of authority provision that addresses the rule’s limits on weighted average portfolio maturity, weighted average portfolio life maturity, and the method for determining those limits. Pursuant to the reservation of authority, the OCC under certain circumstances may allow banks to temporarily operate STIFs affected by sudden disruptions in financial markets with increased maturity limits.

Recent events have significantly and adversely impacted global financial markets, and the OCC is concerned about the potential effects on STIFs operated by banks. The Order temporarily extends the maturity limits for STIFs affected by the market effects of COVID-19. The Order provides that a bank will be deemed in compliance with the STIF rule if

  • the STIF maintains a dollar-weighted average portfolio maturity of 120 days or less.
  • the STIF maintains a dollar-weighted average portfolio life maturity of 180 days or less.
  • the bank determines that using these temporary limits would be in the best interests of the STIF under applicable law.
  • the bank makes any necessary amendments to the written plan for the STIF to reflect these temporary changes.

The relief provided by the Order terminates on July 20, 2020, unless the OCC revises the Order before that date.

Further Information

Please contact Patricia Dalton, Director, Asset Management Policy, at (202) 649-6401, or Jamey Basham, Assistant Director, Chief Counsel’s Office, at (202) 649-5490.

Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel 
 

Related Link

1 The term "banks" refers collectively to national banks, federal savings associations, and federal branches of foreign banking organizations.

2 Refer to 12 CFR 9.18. Federal savings associations that establish and administer such funds must comply with 12 CFR 9.18. Refer to 12 CFR 150.260(b).