Investment News writes "SEC pitches plan to prevent 'breaking the buck'". It says, "To prevent another instance of a money market fund's 'breaking the buck,' the Securities and Exchange Commission is discussing placing capital requirements on such funds. The idea could trump the Investment Company Institute's proposal to create a liquidity bank, to which all money market funds would contribute. The bank would help backstop funds in case of an investor panic.... Although the fund industry 'largely supports' the notion, the support has been 'somewhat tentative,' Robert Plaze, associate director of the Division of Investment Management at the SEC, said via a video hookup during a panel discussion last week at the ICI's Mutual Funds and Investment Management Conference. Given that tepid response, the SEC is discussing other ideas such as those suggested by Fidelity Investments, which opposed the notion of a liquidity bank in its comment letters to the President's Working Group. Under the Fidelity proposal, money market funds would create a capital reserve or an 'NAV buffer' by charging investors more over a period of time, said Norman Lind, head of trading for the taxable- and municipal-money-market desks at Fidelity Management and Research Co., the investment adviser for Fidelity's family of mutual funds."
