The Wall Street Journal writes "SEC: More Changes for Money-Market Funds". It says, "Money-market funds could be forced to pay out less interest under new federal rules designed to make them sturdier. With memories still raw from the 2008 meltdown of Reserve Primary Fund, the Securities and Exchange Commission released rules on Wednesday that require funds to hold more liquid and higher-quality assets and disclose the value of their assets per share more frequently. The trade-off: These safeguards also will put pressure on yields that are already near zero. The changes likely will reduce yields by about 0.10 percentage point, said Pete Crane, president of research firm Crane Data LLC. This isn't good news for money-fund sponsors already suffering from redemptions because of their low rates. Investors pulled about $540 billion out of money-market mutual funds last year, bringing assets to $3.3 trillion, according to Crane." The Journal adds, "For the most part, the rules resemble many of the SEC's original proposals last year. Notably, they didn't include a controversial idea that the agency proposed be considered -- scrapping the $1-per-share standard for money funds in favor of a floating standard -- which is an idea that was strongly opposed by the industry. Instead, the rules will require a fund to disclose its actual 'mark-to-market' net asset value, known as 'shadow NAV,' on a 60-day lag." Also, Investment News' writes "Money funds forced to disclose floating net asset values". It says, "Money market funds will have to disclose on a delayed basis their fluctuating 'shadow' net asset values rather than their $1-per-share value, thanks to new rules adopted today by the Securities and Exchange Commission.... But Peter Crane, president of Crane Data LLC, which tracks money market fund performance, says that requiring money market funds to disclose a shadow net asset value on a delayed basis is 'a baby step towards more transparency in the actual NAV.' The concern is either a floating rate or a shadow price would be interpreted the wrong way by investors, Mr. Crane said." Investment News quotes Crane, "If [investors] see $0.999 [per share] they're going to say, 'Oh my God, my fund broke the buck,' when these are just normal fluctuations that happen all the time."
