By Sarah N. Lynch
WASHINGTON Dec 7 Luis Aguilar, a Democratic
member of the U.S. Securities and Exchange Commission, said he
is more open to supporting a money market fund proposal now that
the agency's economists have completed a study on the issue.
"The huge benefit of having the study and the comments we
receive on the study is that it will put me, and I suspect my
colleagues, in a much better position to allow us to vote on a
proposal," Aguilar told Reuters on Friday.
"It's important information that was lacking in the earlier
Aguilar's comments could provide a breakthrough for the SEC,
which has been deadlocked on whether or not to proceed with a
new round of money market fund reforms for the $2.6 trillion
Aguilar said he's optimistic the proposal could be done in
early 2013, but that will be after SEC Chairwoman Mary Schapiro
steps down, leaving the agency split evenly between two
Republicans and two Democrats.
It is unclear if either of the SEC's two Republicans would
be willing to support a proposal. In order to advance next year,
it would need support from at least one of them.
In August 2012, Schapiro announced that she could not muster
enough support from Aguilar or the SEC's two Republican
commissioners - Troy Paredes and Daniel Gallagher - for a
proposal that she believes will reduce the risk of runs on money
The three said they felt the SEC first needed to study the
impacts of 2010 reforms for the industry before launching a new
round of rules.
That study was released earlier this week. It found that
while the 2010 reforms helped bolster the industry, they would
not have been enough to prevent a run on the Reserve Primary
Fund in 2008 during the financial crisis.
Schapiro's proposal contained several options, including
capital buffers and redemption hold-backs, or shifting from a
stable $1 per share net asset value to a floating NAV.
The industry has staunchly opposed those proposals, saying
they could severely reduce investor interest in the products,
which are generally considered safe investments.
Aguilar said he could potentially vote for a proposal
containing either of those options, so long as they were
substantiated with the findings in the study.
He added that the SEC's staff is currently drafting an
early-stage proposal incorporating the study's findings.
(Reporting By Sarah N. Lynch; Editing by Kenneth Barry)