The Securities & Exchange Commission announced the scheduling of a June 5 meeting to vote on the release of a set of long-awaited money market funds reforms. The "Sunshine Act Meeting posting says, "Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, June 5, 2013 at 10:00 a.m., in the Auditorium, Room L-002. The subject matters of the Open Meeting will be: The Commission will consider a recommendation to propose amendments to certain rules under the Investment Company Act that govern the operation of money market funds and related amendments to Form PF under the Investment Advisers Act. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400. Elizabeth M. Murphy, Secretary."

Bloomberg explains in "SEC to Vote June 5 on Floating Share for Riskier Money Funds," "The U.S. Securities and Exchange Commission will vote next week on a proposal that would require a floating-share value for the riskiest type of money-market mutual funds, two people briefed on the matter said. The floating-share proposal would apply only to funds that buy corporate debt and cater to institutional clients, said the people, who asked not to be named because details of the proposal haven't been made public. The commission announced in a notice posted on its website today that it would meet on June 5 to consider rules governing money-market funds."

The Wall Street Journal writes in "SEC to Vote Next Week on Money-Market Fund Rules," "U.S. securities regulators plan to vote next week on new rules for a $2.6 trillion corner of the mutual-fund industry that would target money-market funds catering to large institutional investors, who bolted out of such funds during the financial crisis. The Securities and Exchange Commission plans to vote next Wednesday on a draft proposal that would require certain types of money funds whose shares are held by corporations and other institutional investors to abandon their fixed $1 share price and allow the price to float as it does with other mutual funds, according to people familiar with the draft. The rule would apply to prime money funds, which invest in short-term corporate debt. SEC officials expect the measure to sail through the five-member commission, but it faces a long path to implementation, including a lengthy comment period and a second SEC vote before its provisions can go into effect."

The Investment Company Institute commented, "ICI Chief Public Communications Officer Mike McNamee issued the following statement in response to the Securities and Exchange Commission notice of an open meeting scheduled for June 5 to consider money market fund regulation: "We look forward to seeing the rule proposal on money market funds that the Commission plans to consider at next week's meeting. We expect this proposal will reflect the extensive research and discussion among commissioners and staff since last summer. As Chairman White has said repeatedly, the goals of any reform must include preserving the economic benefits of money market funds -- both for investors and for the businesses and state and local governments that rely upon these funds for financing."

Chamber of Commerce's Center for Capital Markets Competitiveness President and CEO David Hirschmann adds, "We will evaluate the SEC's forthcoming proposal on whether it accomplishes the goal of strengthening money market funds while preserving them as an important cash management tool and vital source of short-term financing for businesses, cities, and states. We have been pleased that all parties in the debate agree that preserving money market funds is necessary to ensure the continued vibrancy of the American economy."

We expect the SEC to issue a brief summary of the proposal next Wednesday (if it passes, as expected), but the full reportedly 500-page proposal should be published in the Federal Register approximately a week later. (In 2009, the SEC held its Open Meeting on June 24 but didn't publish the then 197-page proposal until July 1.) Last time around, there was a 60-day comment period followed by a 4 1/2-month gestation period, and an extended phase in of the various components (3 months to a year in most cases). Given a similar timetable, final rules for this latest round would arrive in January 2014, and a floating NAV, if it survives, would arrive at some point in late 2014 at the earliest, and more likely at some point in 2015.

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