The Wall Street Journal writes "Money-Fund Buffer May Be Set at Under 1%". The article says, "The Securities and Exchange Commission is considering requiring money-market mutual-funds to hold a "small" capital buffer of less than 1% of the overall value of a fund's holdings, a senior SEC official said Tuesday. Bob Plaze, a senior official in the SEC's investment-management division, for the first time publicly signaled the general size of a capital buffer the agency is weighing that would insulate money funds from sudden losses in the values of their holdings. He said it would be less than 1%, speaking at a legal panel here. SEC Chairman Mary Schapiro is pushing her divided agency toward a vote on tougher rules for the $2.5 trillion industry as early as this month. SEC staff distributed a 337-page draft proposal to the agency's five-member commission last week, but its details have yet to be made public." The piece adds, "Even a small buffer of under 1% could require the money-fund industry to set aside billions of dollars to insure against potential losses. But Mr. Plaze said the amount of capital each fund would have to post would vary, based on the risk of the investments in the fund -- corporate debt, government securities or bonds issued by states and localities." See also, WSJ's "Sub-Zero Rates Risk Freezing Europe's Money Markets".
