"Industry, SEC Spar Over Money Funds"
"Industry, SEC Spar Over Money Funds" writes Money Management Executive. The article, printed in Financial Planning, says, "The Securities and Exchange Commission is considering making significant changes to money market mutual funds because there is still a danger that these funds could be unable to meet redemptions when investors begin to step off the sidelines en masse and move back into equity markets. At a seminar on money market funds held last week at the U.S. Chamber of Commerce and hosted by the Center for Capital Markets Competitiveness, Vanguard Chairman John Brennan admitted that money funds had a near-death experience late last year." He said, "What happened last September was terrible -- and it should not have happened -- but it triggered intense reflection and examination in our industry." MME says, "In order to get a better sense of how to improve the system and prevent similar problems, regulators and industry leaders have been looking at what went wrong last year." The article also says, "In June, the SEC will consider radical changes to Rule 2a-7, including the elimination of the stable $1 NAV, limiting a fund's size relative to its respective market, requiring minimum cash reserves such as 10% of the fund's total assets, and requiring money funds to have insurance guarantees similar to the Federal Deposit Insurance Corporation's bank guarantee. But without a $1 NAV, industry leaders fear that trillions of dollars of assets could leave the mutual fund industry for other sectors that are perhaps less suited to handle such traffic." Also, for those attending the New York Cash Exchange this week at the New York Hilton, check out Peter Crane's panel, "Near-Death Experience: Learning from the Turmoil in Money Market Mutual Funds" Wednesday at 2pm.
