IOSCO Issues "Money Market Fund Systemic Risk Analysis and Reform Options". It says, "Certain events during the recent financial crisis highlighted the vulnerability of the financial system, including Money Market Funds, to systemic risk. These events have prompted a review of the regulation of the role of MMFs in the non-bank financial intermediation system. In this regard, the Financial Stability Board (FSB) asked IOSCO to undertake a review of potential regulatory reforms of MMFs that would mitigate their susceptibility to runs and other systemic risks, and to develop policy recommendations by July 2012. IOSCO has mandated its Standing Committee on Investment Management (SC5) to elaborate such policy recommendations. To ensure a sound base for evaluation of these options, the FSB asked IOSCO to review: - The role of MMFs in funding markets; - Different categories, characteristics and systemic risks posed by MMFs in various jurisdictions, and the particular regulatory arrangements which have influenced their role and risks; - The role of MMFs in the crisis and lessons learned; - Regulatory initiatives in hand and their possible consequences for funding flows; and - The extent to which globally agreed principles and/or more detailed regulatory approaches are required/feasible. The objective of this consultation paper is to share with market participants IOSCO's preliminary analysis regarding the possible risks MMFs may pose to systemic stability, as well as possible policy options to address these risks." To submit comments (before 28 May 2012), e-mail moneymarket@iosco.org and include "Money Market Fund Systemic Risk Analysis and Reform Options" in the subject line. (Look for full coverage in our "News" later Monday.)
