The U.S. Federal Reserve Board announced that it is expanding its backstop plan for money market funds.

The fed said Wednesday that the set of institutions eligible to participate in the Money Market Investor Funding Facility (MMIFF) has been expanded from U.S. money market mutual funds to also include a number of other money market investors.

The newly eligible participants include U.S.-based securities-lending cash-collateral reinvestment funds, portfolios, and accounts (securities lenders); and U.S.-based investment funds that operate in a manner similar to money market mutual funds, such as certain local government investment pools, common trust funds, and collective investment funds.

The Fed noted that the possibility that the set of eligible investors would be expanded beyond money market mutual funds to include other money market investors was noted when the program was first announced on Oct. 21, 2008.

Additionally, the Fed authorized the adjustment of several of the economic parameters of the MMIFF, including the minimum yield on assets eligible to be sold to the MMIFF, to enable the program to remain a viable source of backup liquidity for money market investors even at very low levels of money market interest rates.

IE