SEC floats small step in money market fund reform

Proposal would make only institutional prime funds float NAVs; good deal for likes of Vanguard, Schwab

May 10, 2013 @ 9:59 am

U.S. securities regulators are reviewing a proposal that would require the riskiest money-market mutual funds to adopt a floating share price, according to a person familiar with the matter.

The proposal from the Securities and Exchange Commission would impose the change only on the type of funds that suffered a flood of investor redemptions in September 2008, when the $62.5 billion Reserve Primary Fund collapsed, said the person, who asked not to be identified because the proposal isn't public. Money funds currently keep a stable value of $1 a share and are used as cash-equivalent accounts by individuals, institutional investors and corporations.

The riskiest funds, known as prime institutional, invest in short-term corporate debt and account for 35 percent of money-fund assets, according to the Washington-based Investment Company Institute, a trade group for the mutual-fund industry. A proposal to limit rule changes to institutional prime funds would be a victory for some companies, including Vanguard Group Inc. and Charles Schwab Corp. (SCHW), that called for sparing funds that invest only in government securities from new rules.

SEC Chairman Mary Jo White said last week that the agency's goal was to mitigate the systemic risk posed by some money funds while preserving the product's value to investors. She said the proposal would be issued publicly soon but declined to say when.

-- Bloomberg News --

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Dynasty's Penney: Top RIA trends for 2018

What's next for RIAs? Dynasty's Shirl Penney talks about the growing numbers of entrepreneurial advisers. Plus, what inspired his own entrepreneurship.

Latest news & opinion

Nontraded BDC sales in worst year since 2010

The illiquid product's three-year decline is partially due to new regulations and poor performance.

Tax reform debate sparks fresh interest in donor-advised funds

Schwab reports new accounts up 50% from last year, assets up 33%.

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print