SEC Champ's Speech at MFIMC
Below, we excerpt from the SEC's Norm Champ, who spoke at this week's MFIMC. He says, "The recent Enforcement action against Ambassador Capital Management that you may have seen in the press stemmed from REO's ongoing analysis of money market fund data, in this case a review of the gross yield of funds as a marker of risk.... Money market mutual fund reform has been an important focus of the Division for some time, and it remains a key initiative for 2014. Last June, the Commission proposed additional money market mutual fund reforms, which were designed to address money market mutual funds' susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks while preserving, as much as possible, the benefits of money market funds. The Commission's proposal included two alternatives that could be adopted alone or in combination. Under the first alternative, prime institutional money market funds would be required to transact at a floating net asset value, not at a $1.00 stable share price. Government and retail money market funds would be permitted to maintain a $1.00 stable share price. Under the second alternative, money market funds would continue to transact at a stable share price, but would be able to use liquidity fees and redemption gates in times of stress. The staff is currently reviewing and analyzing the more than 1,400 letters that were submitted, with the intention of making a recommendation to the Commission. As Chair White has indicated, the rule is a critical priority for the Commission in the relatively near term of 2014."
