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SEC Commissioner Hints at Money Market Fund Proposal Near

  • By Konstantine Kastens, AFP Government Relations Administrator
  • Published: 2013-04-11

According to a recent Bloomberg interview with Commissioner Daniel Gallagher, a member of the U.S. Securities and Exchange Commission (SEC), new rules governing money-market mutual funds are expected to be proposed within the next two months.

The upcoming proposal is expected to stem from previous efforts, Gallagher told Bloomberg, restructuring money-market funds through valuation on a fluctuating basis, as opposed to their current stable $1 net asset value (NAV).

After resistance from both investors and issuers of money-market funds last year, former SEC Chairman Mary Schapiro withdrew a scheduled vote on whether, among other proposals, to shift money-market funds to a floating NAV. Unable to find the needed majority of support among the five SEC commissioners, the Financial Stability Oversight Council (FSOC), an oversight panel headed by the U.S. Treasury Secretary and empowered by the Dodd-Frank Act, stepped in and issued a report that called for a floating NAV and implementation of stricter capital buffers on money-market funds.

Gallagher, who joined Schapiro in support of the floating NAV, told Bloomberg he does not expect that newly-confirmed SEC Chairman Mary Jo White will "slow consideration of the proposal." As of now, White has refrained from taking an explicit position on the contentious debate, conferring only during her Senate nomination hearing that she supported need to preserve money-market funds for the protection of the investor.

 

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