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Money Market Managers Look to Private Funds

To avoid complying with the money market reforms adopted by the SEC in July, some asset managers are contemplating launching private funds, according to the Financial Times. When fully implemented, the reforms will require non-government institutional money market funds to adopt a floating NAV and would give fund boards the power to impose liquidity fees or redemption gates under certain circumstances. According to Sean Tuffy, head of regulatory strategy at Brown Brothers Harriman, “[t]he variable NAV was not something the market wanted, so it makes sense that groups would look to create structures that replicate the CNAV fund.” The possibility of asset managers using unregistered products to avoid the new regulations concerned the SEC in the final rulemaking. The article notes that investors in European money market funds may also seek a private fund options in the face of potentially similar European regulations.