The SEC staff is reportedly set to propose several extensive changes to money market fund regulations. The proposal would require money market funds to float their NAV and have a capital buffer, attained by a corporate cash injection (likely from the fund's sponsor), issuing stock or debt securities, or collecting more money from shareholders. The proposal would also implement a so-called "liquidity fee" on investors who are trying to sell all their shares at once-such investors would only receive 95% of their money back immediately, with the remaining 5% returned to them 30 days later.
The proposal is strongly opposed by the industry and comes at a time when money market funds are struggling in a low-interest rate environment. In recent years, firms have waived fees in an effort to keep yields above 0%. A majority of the SEC's five commissioners must approve the proposal before it can be submitted to the public for comment. According to the Wall Street Journal, three out of the five commissioners have expressed reluctance to support changes to current money market fund regulations.