SEC Says No To Proposed Money Market Reforms

[Video: SEC Tables Money Market Fund Regulation: Michael Markowitz Analysis – MarketsReformWiki]

“The proposal would have been the second phase of the Chairman’s oft-stated plan that she said would reduce money market funds’ susceptibility to runs, protect retail investors, and lessen the potential need for future bailouts. In her statement, Chairman Schapiro urged other policymakers to consider ways to address what she perceives to be systemic risks posed by money market funds…” (MoFoLLP)

For your reference, law firm news and analysis on the SEC’s recent decision not to move ahead with proposed money market reforms:

U.S. SEC Chairman Schapiro Announces SEC Will Not Vote on Money Market Fund Reform, But Other Regulators May Take Action (Dechert LLP):

“Chairman Mary L. Schapiro of the Securities and Exchange Commission (SEC) issued a press release on August 22, 2012, announcing that the SEC would not call a meeting to vote on a proposal to introduce additional reforms for money market funds (money funds). There have been several years of controversy regarding whether additional regulatory reform of money funds is warranted, and there had been reports that the SEC would vote on a draft proposal in late August. However, the press release states that three of the four other SEC Commissioners had informed Chairman Schapiro that they would not support the draft proposal prepared by SEC staff…” Read on>>

SEC Abandons Money-Market Fund Reform (Katten):

“Chairman Shapiro stated that in her view the exemptive rules that allow a money-market fund to maintain a stable $1.00 net asset value (NAV), rather than having to mark-to-market as is required by all other mutual funds, create systemic risks to US financial markets because money-market funds have insufficient ability to absorb losses above a certain amount without ‘breaking the buck’ and, if that were to occur, there would be massive withdrawals from money-market funds which could create or further exacerbate a financial crisis…” Read on>>

SEC Statement on Money Market Fund Reforms (Morrison & Foerster):

“The controversial rule proposals reportedly would have required money market funds to choose between two alternative structures. The first would have called for money markets funds to float their NAV and use mark-to-market valuation like other mutual funds. The second would have required funds to adopt a capital buffer of less than 1% of fund assets to absorb the day-to-day variations in the value of a money market fund’s holdings. This latter proposal would be combined with a minimum balance at risk requirement that would restrict shareholders from redeeming their full account value at one time by imposing a 3% holdback…” Read on>>

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