SEC Chairman Testifies before Senate Committee Regarding Mutual Fund Reform

June 21, 2012

SEC Chairman Mary Schapiro testified before the Senate Committee on Banking, Housing, and Urban Affairs (the “Committee”) about the SEC’s regulation of money market funds.  Her testimony, titled “Perspectives on Money Market Mutual Fund Reform,” covered the history of money market funds, the SEC’s concerns with the systemic risks posed by money market funds even after the 2010 reforms, and the need for further reform.
Regarding future reforms, Chairman Schapiro testified that the SEC staff is exploring a number of reforms, two of which she highlighted: (1) the use of floating net asset values, which would require money market funds to buy and sell their shares based on the market value of the funds’ assets, and (2) a requirement that money market funds maintain a capital buffer to support the funds’ stable values, possibly combined with limited restrictions or fees on redemptions.  Schapiro testified that limits on redemptions could further enhance a money market fund’s resiliency and ability to handle a credit event, while restrictions on redemptions could be designed so that redeeming shareholders bear the cost of redemptions when liquidity is tight.  Ms. Schapiro told the Committee that these reforms and others are the subject of continuing analysis and discussion at the SEC, and that any proposed reforms would be presented in accordance with the SEC’s procedures for public consideration and comment.
To access the testimony Click here.


Investment Advisers, Investment Companies