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Financial Services Law Insights and Observations

OCC issues interim rule and order to extend short-term investment fund maturity

Federal Issues OCC Enforcement Department of Treasury Agency Rule-Making & Guidance Covid-19

Federal Issues

On March 22, the OCC announced the release of a short-term investment funds (STIF) interim final rule. The rule—which is effective immediately—revises the OCC’s STIF rule “for national banks acting in a fiduciary capacity” and “allows the OCC to authorize banks to temporarily extend maturity limits of these funds” for financial market disruptions that prevent banks from complying with required STIF maturity limits. Comments on the interim rule must be received by May 9.

Along with the interim final rule, the OCC issued OCC Bulletin 2020-22 regarding its March 21 order which temporarily extends maturity limits for STIFs that have been affected by financial market disruptions as a result of Covid-19. According to the order, a bank will be considered to be in compliance if (i) “the STIF maintains a dollar-weighted average portfolio maturity of 120 days or less”; (ii) the STIF maintains a dollar-weighted average portfolio life maturity of 180 days or less”; (iii) “the bank determines that using these temporary limits would be in the best interests of the STIF under applicable law”; and (iv) “the bank makes any necessary amendments to the written plan for the STIF to reflect these temporary changes.” The temporary limits will be in effect until July 20, unless extended by the OCC.