| WASHINGTON, July 15
WASHINGTON, July 15 A top official of the U.S.
Securities and Exchange Commission raised doubts on Tuesday on
whether his agency will adopt rules requiring prime money market
funds to allow the value of their shares to float, saying
deliberations are ongoing and that he opposes a key element of
"There is a question on whether we are going to move forward
on a floating (net asset value)," Michael Piwowar, a Republican
member of the SEC, told reporters on the sidelines of an event
at the American Enterprise Institute.
"We are still in discussions. ... The commission is still
trying to work to formulate what the final version of the rule
will be," he said, noting that it may or may not contain a
Piwowar's comments come as the SEC is working to put the
finishing touches on a rule aimed at reducing the risk of
investor runs on money market mutual funds similar to what
occurred in the 2008 financial crisis.
The rule, which was proposed prior to Piwowar's tenure,
contains several options. It would require prime institutional
funds to shift from a stable, $1 per share net asset value to a
floating net asset value.
It also would permit fund boards to impose "gates" on
redemptions and charge liquidity fees in times of stress.
The SEC could opt to adopt one of the two plans, or adopt
them in combination.
A person familiar with the matter told Reuters last week
that the SEC was eyeing July 23 as a possible date for a vote
and that it was leaning toward adopting a rule that combines the
Piwowar declined to confirm the date or how the rule may
But he said he cannot support a floating net asset value in
its current form because it would require floating shares to be
rounded to the fourth decimal place -- something he said is out
of line with current market practice.
"We don't require that on any other mutual fund. It makes
absolutely no sense to me," he said, adding that he would
support a stand-alone plan for fees and gates.
The money market fund industry has expressed reservations
against a floating net asset value amid concerns it could kill
The fears are partly driven by how the switch to a floating
net asset value would trigger certain tax rules.
Funds with a stable $1 per share NAV do not generate gains
or losses, but a floating share price would force investors to
track tiny gains and losses on a routine basis for tax
A failure to reach a workable solution could pose a wrinkle
for the SEC, because some commissioners have said the tax issue
must be fixed in order for them to support a floating NAV.
The U.S. Treasury has yet to announce a proposal to address
the tax concerns.
Piwowar said on Tuesday he is "aware of a particular fix"
that is in the works, but declined to provide details, saying he
did not wish to "front run" the Treasury.
(Reporting by Sarah N. Lynch; Editing by Leslie Adler)