23 July 2014

SIFMA statement on SEC money market fund reform

"Money market funds play a vital role in capital formation and credit availability by providing retail and institutional investors with an attractive option for cash investing and enabling businesses to access the short-term funding they need to carry out their daily operations, pay employees and spur economic growth. SIFMA commends Chair White's leadership in navigating the rule to completion and acknowledges the balanced, inclusive and transparent approach taken by the SEC in developing this regulation. Today's final rule will provide the marketplace with a degree of certainty regarding the future of these funds.

"Upon first review, we are encouraged that the SEC has limited the new floating NAV requirement to institutional prime funds. We agree that it is appropriate to carve out retail and government money market funds from a floating NAV requirement as these funds have not shown susceptibility to destabilising runs. Importantly, we also believe the SEC has appropriately reframed the determination of retail funds by looking at fund policies and procedures designed to limit investors in these funds to natural persons as opposed to redemption limits as originally proposed, as the nature of investors is a better indicator of a true retail fund. Further, we support the SEC's decision to move forward with a voluntary fees and/or gates program that relies on the expertise of fund boards, instead of generally imposing a broad fees- and/or gates-mandate.

"SIFMA will be reviewing the final rule in more detail with our members. While we may not agree with every provision of the final rule, we are committed to helping our members implement the new requirements, including necessary tax and accounting changes, so the industry can move forward and these funds can continue to provide critical capital formation and investment benefits that help grow the American economy."

Full press release

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