September 5, 2008
I think the SEC's proposal to revise the 2a-7 regulations is a natural response to the fast-changing market environment, and it aims at incentivizing MMF investment advisors to conduct in-house credit research by eliminating the source of easily-accessible credit information (i.e. credit ratings assigned by NRSROs).
However, I believe an absolute elimination of references to ratings assigned by NRSROs is a drastic measure which could negatively impact the performance of fund families with limited resources and increase the cost of credit research for all MMFs.
I do believe that publicly available ratings could be easily integrated into the in-house research of MMFs.