| 6/25/2009
The Securities and Exchange Commission voted unanimously June 24 to propose rule amendments to require
money market funds to maintain a portion of their portfolios in highly
liquid investments, reduce their exposure to long-term debt, and limit
their investments to only the highest quality portfolio securities.
The proposals, according to the SEC, also would require the monthly
reporting of portfolio holdings, and allow the suspension of
redemptions if a fund “breaks the buck” to allow for the orderly
liquidation of fund assets. The Commission’s proposal requests comment
on altering the current regime of the $1 stable net asset value (NAV)
for money market funds.
In response to the proposal, the Investment Company Institute says
it “continues to strongly oppose a move to floating NAVs because such a
change would be so unpopular with investors that it would likely push
them into riskier, less-regulated products.”
SEC Chairman Mary Schapiro stated at the June 24 open meeting that
“these proposals are designed to increase the ability of money market
funds to weather future economic storms.” She said “the stability of
money market funds in times of turmoil is enormously important both for
investors and for the securities markets. The proposals also would
improve the operations of money market funds and oversight of their
investments during calmer times, which can further protect funds and
increase public awareness of potential risks.”
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