Stradley Ronon recently published "Fund Alert, A Rule 2a-7 Special Edition, February 2010" with the headline, "SEC Amends Rule 2a-7 to Increase Resilience of Money Market Funds". Under the section, "A First Step; Fundamental Reforms May Come," it says, "The commissioners and SEC staff members at the Meeting made clear that the Amendments are the first step in a two-step reform initiative and that additional, more fundamental reforms may be released for public comment. There is no timetable for the additional proposals, although Commissioner Luis Aguilar mentioned in his remarks at the Meeting that the SEC may solicit comment 'in the near future' on such reforms. In addition, the President's Working Group on Financial Markets (the PWG) is expected to make recommendations on fundamental reform of money market funds in a report that is now long overdue, having passed both its original target release date of Sept. 15, 2009, and its extended target release date of Dec. 1, 2009." It adds, "Commissioner Mary Schapiro mentioned the following additional reforms that are under consideration: the use of a floating net asset value (NAV) for money market funds, rather than the stable $1.00 NAV prevalent today; mandatory redemptions-in-kind for large redemptions (such as by institutional investors); 'real-time' disclosure of funds' market-based 'shadow' NAV; a private liquidity facility to provide liquidity to money market funds in times of stress; and, a possible 'two-tiered' system of money market funds, with a stable NAV only for money market funds subject to greater risk-limiting conditions and possible liquidity facility requirements."
