Money Market Rule Changes

     WASHINGTON (CN) – The Securities and Exchange Commission plans to amend regulations to make money market funds more liquid, resilient to market turmoil, and less susceptible to collapse if consumers make a “run” on the funds.

     Specifically, the SEC wants to tighten risk controls in money market funds by requiring funds to maintain a part of their portfolios in instruments that can be readily converted to cash, reducing the weighted average maturity of portfolio holdings, and limiting funds to investing in the highest quality portfolio securities. The SEC also plans to require money market funds to report their portfolio holdings monthly to the agency.
     Under these changes, money market funds that have “broken the buck” (re-priced its securities below $1.00 per share) would be allowed to temporarily suspend redemptions, if the board of the fund decides to liquidate the fund, to allow for the orderly liquidation of fund assets without driving the prices of fund assets down.

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