Dec 13 BlackRock Inc, the world's
largest money manager, offered a detailed plan on Thursday to
break a deadlock with regulators over tightening rules on the
$2.6 trillion U.S. money market fund industry.
Regulators have been seeking to tighten rules on money funds
in the wake of the financial crisis, when problems at one fund
spooked investors and sparked a run of withdrawals that
threatened to destabilize the economy. But the industry has so
far successfully defeated the plans by arguing that the new
rules would make the funds too expensive to run and unappealing
Under BlackRock's proposal, money funds would maintain a
constant net asset value in times of market turmoil by imposing
a fee of 1 percent on customer withdrawals. The so-called
stand-by liquidity fees would go back into to the funds to
bolster their share price.
New York-based BlackRock included the proposal in a 26-page
letter to regulators.
BlackRock also said it opposed the latest reform options
offered by the U.S. Financial Stability Oversight Council last
month. Those options relied on either ending the industry's
fixed $1-per-share pricing policy or requiring funds to set
aside capital against future losses.
Although BlackRock has indicated a willingness to compromise
in the past, most of the money fund industry, including leading
companies like Fidelity Investments and Federated Investors Inc
, have long opposed floating share prices and capital