McNabb to FSOC: Forget funds

JAN 20, 2013
William McNabb, chief executive of The Vanguard Group Inc., wants the Financial Stability Oversight Council to stay out of the battle over money market fund regulation. “FSOC should not make recommendations to the SEC at this time,” Mr. McNabb said in an open letter to the council, which was created by the Dodd-Frank financial reform law to allay significant risks to the economy. “The SEC is the appropriate agency to determine which additional reforms should be implemented for MMFs.” In November, the FSOC proposed additional regulations on money market funds after Mary Schapiro, then chairman of the Securities and Exchange Commission, could not persuade other members of the SEC to support new regulations to reduce the risk of a run on funds, as there was in 2008. The FSOC recommended that funds be required to float the reported net asset value of the fund and/or keep capital buffers against the risk of runs on the funds. Vanguard has roughly $200 billion invested in money market funds, according to the letter sent by Mr. McNabb. He also suggested that any further reforms by the SEC be limited to funds that invest in securities issued by banks, financial institutions and operating companies — the so-called institutional prime money funds.

CALLS FOR FOCUS ON PRIME FUNDS

“By focusing additional reform measures on institutional prime MMFs,” Mr. McNabb wrote, “regulators will be able to appropriately address the most concerning risks while retaining Treasury, government and tax-exempt money market funds in their current form for the retail investor.” This month, BlackRock Inc., The Goldman Sachs Group Inc., JPMorgan Chase & Co., Fidelity Investments, Federated Investors Inc. and The Charles Schwab Corp. said they would begin disclosing their money market funds' net asset values each day. Vanguard said it would not follow the crowd. [email protected] Twitter: @aoreport

Latest News

BlackRock expands Aladdin's private markets benchmarking tools
BlackRock expands Aladdin's private markets benchmarking tools

New Preqin-powered benchmarks add transparency to private equity and credit performance across BlackRock's platforms.

Fed's Bowman pushes for lighter-touch AI oversight at smaller firms
Fed's Bowman pushes for lighter-touch AI oversight at smaller firms

Supervision vice chair speaks following recent launch of AI adoption practices by regulators.

Why fixed income still belongs in your clients' portfolios
Why fixed income still belongs in your clients' portfolios

In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.

Voya expands advisor managed accounts to add private market assets
Voya expands advisor managed accounts to add private market assets

Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.

With executives leaving, Osaic’s Reid now in the spotlight
With executives leaving, Osaic’s Reid now in the spotlight

Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.