The SEC has issued a release seeking comment on the options discussed in the President’s Working Group on Financial Markets’ (PWG) study of possible money market fund reforms. Public comments and input on the options discussed in the PWG's report will help inform the SEC's consideration of reform proposals for mitigating the systemic risk associated with money market funds and reducing their susceptibility to runs.
Comments are due by January 10, 2011.
As we reported in our October 26 post, "PWG Issues Money Market Report," the PWG's document lays out in detail a number of options for money market fund reforms, ranging from measures that could be implemented by the SEC under its current statutory authority, to more sweeping changes that would require coordination by government agencies, legislative change, and/or the creation of new government chartered private entities:
- Floating net asset values
- Private emergency liquidity facilities for MMFs
- Mandatory redemptions in kind
- Insurance for MMFs
- A two-tier system of MMFs with enhanced protection for stable NAV funds
- A two-tier system of MMFs with stable NAV MMFs reserved for retail investors
- Regulating stable NAV MMFs as special purpose banks
- Enhanced constraints on unregulated MMF substitutes
In addition to the reform options, the PWG's report supports the SEC's recent rule amendments governing money market funds, and urges the SEC to consider some or all of the group's suggestions to to address money funds' vulnerability to runs.
The full text of the Commission's release requesting comments is available at: http://www.sec.gov/rules/other/2010/ic-29497.pdf
The full text of the PWG's report is attached to the Commission's release, and is also available at: http://www.treas.gov/cgi-bin/redirect.cgi?http://treas.gov/press/releases/docs/10.21%20PWG%20Report%20Final.pdf