The Wall Street Journal writes "Administration Considers Breaking Buck-a-Share Rule for Money Funds". It says, "The administration called for new rules to prevent runs on money-market funds that can pose risks to the entire financial system, as occurred last fall. It urged study of potential solutions such as requiring funds to secure private investors as a backstop or -- more controversially -- dumping the $1 standard in favor of a floating number. The Securities and Exchange Commission is expected to propose rules next week, and is likely to raise the possibility of a floating number, technically a net asset value. Already, the Investment Company Institute, the lobby for the mutual-fund industry, is pushing back." The Journal quotes ICI's Paul Schott Stevens, "If you float the value of a money fund, you've essentially destroyed the product. We're going to explain clearly to the working group why we believe a fluctuating [NAV] is a very bad idea." The article adds, "But with a floating NAV, many investors might not be able to use money funds for their day-to-day cash transactions, said Peter Crane, president of Crane Data LLC, which tracks the funds. The elimination of the $1 standard 'could cause a major flight from the asset class.'" Finally, the WSJ article says, "In the near term, the SEC is expected to propose shortening the maturity, raising the creditworthiness and increasing liquidity of securities money funds can hold.... `Another idea the SEC is expected to propose is public disclosure of net asset values to the third decimal. The ICI opposes that, saying fluctuations in the rate could drive investors away from funds."
