SEC Proposes Money Market Fund Reform

June 5, 2013

On June 5, 2013, the SEC voted unanimously to propose amendments and new rules that aim to reform the operation of money market funds. The overarching goal of the Proposal is to make money market funds less susceptible to runs during periods of economic stress that could harm investors.  The Proposals include two principal reforms that could be adopted separately or in combination, as amendments to Rule 2a-7.  The first alternative would require a floating NAV for prime institutional money market funds.  A second alternative would allow money market funds to put in place liquidity fees and redemption gates in times of economic stress.  Additionally, the SEC proposed enhanced disclosure requirements, diversification limits and certain other requirements as part of the Proposals that would apply under either alternative. The SEC’s Proposals and requests for comments could result in significant changes to the money market fund regulatory landscape and have consequences for the financial industry generally. The proposed changes would affect both institutional and retail investors and impose additional responsibilities on a money market fund’s Board. The SEC has requested comment on the amendments proposed in the Release, as well as empirical data to support commentors’ views.
The comment period will last for 90 days after publication in the Federal Register.
Click here to access the Proposing Release.


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Investment Advisers, Investment Companies