"SEC to propose major overhaul of money funds" writes Investment News, saying, "The Securities and Exchange Commission is considering a list of regulations for money market funds that goes far beyond proposed reforms issued in March by the Investment Company Institute. The SEC, which is expected to issue its proposed rules this month, is considering guidelines that would make clear a fund's responsibility to turn away influxes of cash from institutional investors that may cause large swings in the fund's assets. Beyond those measures, the SEC is considering a rule change that would require funds to disclose regularly the market value of their underlying assets. Currently, money market funds are required to disclose their holdings quarterly, without assigning a market value to those holdings." The article adds, "The SEC is unlikely to endorse the idea of a so-called floating net asset value, which would untie money market funds from their $1-a-share value, according to a source with knowledge of the commission's deliberations, who asked not to be identified." It quotes Peter Crane, president of Crane Data LLC of Westborough, Mass., a research firm that tracks money market mutual funds, "The $1 [per share net asset value] holds vast psychological importance. Moving to any other number may shake the faith in the product." IN quotes Crane on the possibility of funds having to disclose actual NAVs, "An investor would see a $0.999 NAV and panic, thinking, 'Oh my God, it's not $1.' It would allow for arbitrage, and it [would] be dangerous in the hands of some investors." "They're going to do [primarily] what the ICI recommended," Mr. Crane predicted.
