FSOC Discussed MMF Reform
The just-released "Minutes of the Financial Stability Oversight Council" (from their July 16 meeting) show that a "MMF Reform Update" was on the agenda. The minutes say, "The Chairperson turned to the next agenda item, regarding an update on the SEC's proposal on MMF reform, and asked Mary Jo White, Chair of the SEC, to introduce the topic. After Chair White's introduction, Norm Champ, Director of the Division of Investment Management at the SEC, and Craig Lewis, Chief Economist and Director of the Division of Economic and Risk Analysis at the SEC, gave a presentation. Mr. Champ provided an overview of the SEC's June 5, 2013, proposed rule for MMF reform. He explained that the proposed rule set forth two alternatives for amending the rules that govern MMFs. The first alternative proposal is floating net asset value, and would require MMFs to sell and redeem shares based on the current market-based value of the securities in their underlying portfolios, rounded to the fourth decimal place. The second alternative proposal is liquidity fees and gates, and would require an MMF to impose a liquidity fee (unless the fund's board determines that it is not in the best interest of the fund) if the fund's liquidity levels fall below a specified threshold and would permit a fund to suspend redemptions temporarily under the same circumstances. Mr. Champ stated that the SEC is seeking public comments on each alternative standing alone, as well as on the possibility of combining the two alternatives. Following the presentation, the members of the Council asked questions and had a discussion." See also, recent Comment letters to the SEC.
