WASHINGTON May 7 Staff at the U.S. Securities
and Exchange Commission have circulated a long-awaited draft
proposing new reforms for the $2.6 trillion money market fund
industry, people familiar with the matter told Reuters.
Details on the exact contents of the roughly 500-page
proposal could not be immediately obtained.
SEC staff have generally been considering whether or not to
target only prime funds, which are seen as more risky and more
likely to experience runs. One such prime fund was the Reserve
Primary Fund, which spooked investors industry-wide in 2008 when
it "broke the buck" amid fears about its heavy exposure to
collapsed investment bank Lehman Brothers.
People familiar with the staff's thinking expect the draft
will address in some form or another whether to require only
certain target prime funds to float their net asset value, an
idea that has previously been suggested by major money fund
players such as Charles Schwab in an effort to strike a
Previously, former SEC head Mary Schapiro had pushed for
tougher measures, including capital buffers and redemption
holdbacks, or moving from a stable to a floating net asset value
on a broader scale.
The lengthy money fund draft arrived in SEC officials'
inboxes on Friday afternoon, just hours after new SEC Chair Mary
Jo White publicly addressed the fund industry's largest trade
association, the Investment Company Institute.
In that speech, White was coy about what the proposal will
contain and its timing, saying only it would be balanced and
unveiled in the "near future."
The draft rule is tentatively scheduled for a 30-day review
period. However, draft rules are often penciled in for a
one-month review period and frequently get extended so
commissioners can get more time to consider them.