ICI's 2014 General Membership Meeting finished yesterday with a "Breakfast Session: A Conversation with SEC Chair Mary Jo White. While White didn't give any indication about whether the Commission would go with the floating NAV option (for Prime Institutional funds), the "gates and fees" (for all Prime funds), or a combination of the two, she did reiterate her comments from earlier this year that the rules would arrive in the "very near term". ICI President Paul Schott Stevens commented in the Q&A, "You knew I'd mention money market funds." White replied, "I did know that." Stevens continued, "The industry is anxiously awaiting a conclusion of the Commission's work on the money market fund rules, and it seemed to me that this would be a perfect time for some kind of announcement."

White answered, "I remember last year, we had just done our proposal, and I said 'I know you want me to say more and I'm not.' Hopefully, when I'm here next year, we'll talk about what's wrong with it. Seriously, the Commissioners, the full Commission, and the Staff are intensely focused on it [MMF Reform] as we speak, completing the very important rulemaking. I expect it will be completed in the very near term. I won't say what the very near term is. But it's front and center."

Stevens commented, "It's no wonder that it takes such intensive effort, because I think probably the record before the Commission in conncetion with that rule is as extensive and detailed as any in the Commission's history.... Obviously, opinions on what reforms are needed are starkly divided. Your bank regulators colleagues continue to press for changes even beyond what the Commission's proposed. There are a wide array of investors and issuers that have urged the Commission to preserve money market funds more or less intact."

He asked, "The issue has generated a lot of interest in Congress, as you know, and, of course, we haven't been shy about offering our own opinions too. Putting aside the merits of what ultimately will come out in the rule, that's a lot of rough water to navigate.... Looking at the final rule, what do you think constitutes a successful outcome for the Commission?"

White responded, "I think adopting a robust, workable rule. Robust in the sense that we meet the issue we're trying to meet.... But we do it in the most cost-effective way. I've said before again a front-and-center consideration is that we accomplish what we think we need to accomplish by way of structural reform, but in as maximum a way as possible preserving this very important product. Those are not easy issues. There are as many opinions on what should be done as there are people, I think, and nothing is wrong with that frankly."

Finally, she told the ICI GMM, "One of the things that is very strong in the way the Commission goes about it's rulemaking -- not everyone would agree with this statement but -- we really do take very deep dives into all the comments that we receive and consider them very seriously.... Obviously, there's a priority on getting the rules done ... but really getting them done right [is important]. We want to know everything we can know before we actually finalize that rulemaking. I think we've put ourself in the position to do that. But that's not going to mean that people don't have different opinions. Your comments have been enormously useful and we take them very seriously as we go through the process."

Some expect the SEC to release its final Money Market Fund Reform rule as early as late June, while others believe it will be late in the summer or perhaps even into September or October before we see the regulations. While we continue to believe the SEC will abandon the floating NAV and choose the "gates and fees" option on its own, the majority of other industry observers thinks that the combination of floating NAV and gates/fees is the most likely outcome at this point. Stay tuned, and we look forward to discussing the pending rulesvfurther at our Money Fund Symposium next month in Boston.

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