A release entitled, "SEC Publishes Request for Comment on President's Working Group Report on Money Market Fund Reform Options" was sent out Wednesday afternoon, saying, "The Securities and Exchange Commission today published a request for public comment on the options discussed in the President's Working Group on Financial Markets report on possible money market fund reforms." Click here for the full "President's Working Group Report on Money Market Fund Reform" request for comment report and click here to submit a comment. (All comments will be made available to the public.)
The release adds, "As contemplated by the President's Working Group report, the SEC is requesting public comment on the options described in the report, including the effectiveness of the options in mitigating any systemic risk or susceptibility to runs associated with money market funds, as well as their potential impact on money market fund investors, fund managers, issuers of short-term debt, and other stakeholders. Comment received will assist the SEC and the Financial Stability Oversight Council in their further analysis. The public comment period will remain open for 60 days following publication of the comment request in the Federal Register." (Expect publication in another day or two.)
The RFC report's Summary says, "The Securities and Exchange Commission is seeking comment on the options discussed in the report presenting the results of the President's Working Group on Financial Markets' study of possible money market fund reforms. Public comments on the options discussed in this report will help inform consideration of reform proposals addressing money market funds' susceptibility to runs.... Comments should be received on or before January 10, 2011." It adds, for further information, contact Daniele Marchesani or Sarah ten Siethoff at (202) 551-6792, Division of Investment Management, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-8549.
Under "Supplementary Information," the RFC says, "Following the recommendation in the U.S. Department of the Treasury's 2009 paper on Financial Regulatory Reform: A New Foundation, the President's Working Group on Financial Markets ('PWG') conducted a study of possible reforms that might mitigate money market funds' susceptibility to runs. The results of this study are included in the report issued on October 21, 2010 and attached to this release as an Appendix. The Report expresses support for the new rules regulating money market funds that the Commission approved last February. These new rules seek to better protect money market fund investors in times of financial market turmoil and lessen the possibility that money market funds will not be able to withstand stresses similar to those experienced in 2007 and 2008. When we adopted these rules, we recognized that they were a first step to addressing regulatory concerns as the events of 2007 and 2008 raised the question of whether further, more fundamental changes to the regulatory structure governing money market funds may be warranted."
It continues, "The Report identifies the features that make money market funds susceptible to runs as well as the systemic implications of the run on prime money market funds that occurred in September 2008. The Report states that the Commission's new rules alone could not be expected to prevent a run of the type experienced in September 2008. `Accordingly, the Report outlines possible reforms that could supplement the new rules we adopted and, individually or in combination, further reduce money market funds' susceptibility to runs and the related systemic risk. Some of the measures discussed in the Report could be implemented by the Commission under our existing statutory authority; others would require new legislation, coordination by multiple government agencies, or the creation of new private entities."
Finally, the SEC's RFC says, "The Commission requests comment on the Report. Comments received will better enable the Commission and the newly-established Financial Stability Oversight Council (which will be taking over the work of the PWG in this area) to consider the options discussed in this Report to identify those most likely to materially reduce money market funds' susceptibility to runs and to pursue their implementation. As the Report states, we anticipate that following the comment period a series of meetings will be held in Washington, D.C. with various stakeholders, interested persons, experts, and regulators to discuss the options in the Report. We request comments on the options described in the Report both individually and in combination. Commenters should address the effectiveness of the options in mitigating systemic risks associated with money market funds, as well as their potential impact on money market fund investors, fund managers, issuers of short-term debt and other stakeholders. We also are interested in comments on other issues commenters believe are relevant to further money market fund reform, including other approaches for lessening systemic risk not identified in the Report. We urge commenters to submit empirical data and other information in support of their comments."
