SPARK Institute on MMF Reforms
The SPARK Institute issued a press release entitled, "SPARK Institute Questions Members On Money Market Fund Reforms." The posting by the retirement plan and insurance industry lobbying group reads, "The SPARK Institute recently surveyed its members on their plans for implementing Money Market Fund reforms. The Securities and Exchange Commission adopted new rules on the way Money Market Funds are managed to address concerns about instability in the market during periods of financial stress. The new rules would require several changes to Non-Governmental [sic] Money Market Funds. First, Money Market Funds would be required to move to a floating NAV, rather than the current stable $1.00 per share used today. Second, during times of extreme volatility, Money Market Fund managers may impose redemption fees and withdrawal restrictions. Other changes include diversification requirements and additional reporting. The SPARK Institute asked its members if they intend to update their defined contribution plan record keeping systems to accommodate the required changes. None of the survey respondents plan to build out the capabilities necessary to impose redemption fees or possible withdrawal gates. Instead, most record keepers are requesting their clients move to Governmental Money Market Funds. When asked how this change was being communicated to plan sponsors, most record keepers said that communication efforts have already begun and that plan sponsors are being given the option to change to a Government Money Market Fund or select a different fund by October of this year. According to one record keeper, plan sponsor reactions have been generally positive. "Most understand that converting to a Government Money Market Fund is easier for participants than trying to educate them about possible redemption fees and withdrawal restrictions during times of financial stress," said one survey respondent." The SPARK Institute represents retirement plan service providers and investment managers, including members that are banks, mutual fund companies, insurance companies, third party administrators, trade clearing firms and benefits consultants.... Collectively, its members serve approximately 85 million participants in 401(k) and other defined contribution plans." In other news, Money magazine's Allan Sloan wrote, "Why I Dumped My Tax-Free Money-Market Fund—and You Should, Too." He states, "I moved a serious slug of money out of tax-free money funds into taxable funds. It's not that I suddenly decided the time had come to pay more to Uncle Sam. It's that, at least for now, the difference in yields between taxable funds and tax-free funds is compelling."
