Vanguard has submitted a response to the SEC's Money Market Fund Reform Proposals. The Vanguard Group, the 7th largest money fund manager with $191 billion, says, "Vanguard strongly supports the majority of the Commission's proposals to amend Rule 2a-7 and certain other rules that govern money market funds under the Investment Company Act of 1940.... Eliminating the ability to purchase 'second tier' securities, imposing a 'weighted average life' requirement of 120 days, instituting daily and weekly liquidity requirements for money market funds, and requiring advisors to implement 'know your customer' procedures and portfolio stress testing will undoubtedly strengthen the credit quality, liquidity, and resiliency of money fund portfolios.... Some of the ideas on which the Commission has requested comment, however, could have unintended consequences that undermine the improvements mentioned above. Fluctuating share prices or disclosing shadow-priced NAV could confuse investors and unnecessarily induce shareholder redemptions during periods of market stress.... Likewise, we believe that some of the Commission's proposed amendments to Rule 2a-7 could adversely affect fund shareholders. For example, the proposed amendment to shorten all money funds' weighted average maturity ('WAM') to 60 days could deny retail investors access to the returns of safe, qualifying longer-dated maturities. The proposal to prohibit money funds from investing in illiquid securities could stifle innovation in the short end of the market.... Vanguard does not support the Proposal that would require money market fund boards to label their funds as 'retail' or 'institutional' and satisfy different weekly liquidity requirements based on these designations."

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