On February 8, 2013, the Forum filed a comment letter with the Financial Stability Oversight Council (“FSOC”) concerning that entity’s proposed recommendations regarding money market fund reform. The Forum’s letter, reviewed prior to issuance by its Steering Committee, echoed comments made in past Forum comment letters on this topic. Specifically, the letter urged the FSOC to allow the SEC to identify any necessary regulatory reforms, as the SEC is best positioned to address how money market funds should be regulated. The letter also notes the unique role of fund independent directors among cash management choices for investors and savers. Oversight by a board, which is responsible solely to those who invest in the product, enhances the effectiveness of fund regulation. The letter also urges the FSOC and the SEC to consider carefully the costs and benefits of any further regulations, including the manner in which any of the proposals will impact the overall amount of systemic risk in the financial system. Reducing the perceived systemic risk of money market funds will have little value if it increases systemic risk elsewhere in the system. Finally, the letter challenges the FSOC to consider carefully the extent to which potential runs on money market funds are a source of systemic risk, or are instead a symptom of other problems in the financial system.
Links to all comment letters filed by the Forum on the subject of potential reform of money market funds can be found on our website, here.