Friday, August 24, 2012

SEC Puts the Brakes on Money Market Reforms


Author: David Schwartz J.D. CPA David Schwartz J.D. CPA

In an August 22, 2012 statement SEC Chair Mary Schapiro announced that the much anticipated money market reforms she has championed have hit a wall.  It had been expected that the Commission would consider next week options for further reform like a free floating NAV, rather than a firm $1 NAV, perhaps a capital buffer, and a redemption restrictions.  Schapiro announced that "because three Commissioners have now stated that they will not support the proposal and that it therefore cannot be published for public comment, there is no longer a need to formally call the matter to a vote at a public Commission meeting."

I -- together with many other regulators and commentators from both political parties and various political philosophies -- consider the structural reform of money markets one of the pieces of unfinished business from the financial crisis.

Though many are saying that money market reforms are dead, Schapiro condsiders money market a priority.  It is likely that something short of rulemaking is in the works at the SEC, perhaps a concept release.   This setback may not sit well with those calling for further reforms, like Treasury Secretary Timothy Geithner and Senator Corker, who have stated that the Financial Stability Oversight Council (FSOC) could act if the SEC fails to move forward with further money market fund reforms.
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