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"Staff are intensely focused" on producing "robust, workable rules in the most cost-effective way", Ms White said. Officials at the Securities and Exchange Commission proposed possible changes last June, including requiring that prime institutional money market funds have a net asset value that would float on a daily basis or keeping the current stable share price, but imposing a liquidity fee or redemption gate; a third option discussed would be some combination of the two approaches.
As many as half of all defined contribution and defined benefit plans use money market funds (MMFs) for stability, liquidity and a low-cost diversified way to access commercial paper and government securities, according to ICI data.
Ms White also addressed concerns about the Financial Stability Oversight Council's process and goals as it attempts to identify financial institutions that pose systemic risk. The council "ought to be looking very closely at what is it (council members) are trying to achieve. What does it actually accomplish?", said Ms White, who is one of 10 voting members on the council. Recognising complaints of a lack of transparency and council members having a banking regulator bias that makes them less familiar with money management firms, Ms White said, "I don't think (money managers) are overreacting to the process. I think it is enormously important for FSOC to make certain that it has the requisite expertise."