The need for further regulations governing money market funds was once again hotly debated at Senate Banking Committee hearings last week.  At the hearings, Treasury Secretary Timothy Geithner reiterated his concerns that the 2010 money market reforms enacted by the SEC just do not go far enough, and doubled down on his commitment to see the SEC enact further measures, saying: "My own judgment is that the SEC needs to go further. They can go further. And we should get on with the business of letting them expose to the world, to the markets, a set of options that the world can comment on." Senator Corker added that he believed that the Financial Stability Oversight Council (FSOC) could act if the SEC fails to move forward with further money market fund reforms.

At the same time, however, Senator Pat Toomey (R-PA) argued that the 2010 reforms may have been sufficient and questioned whether money market funds are truly susceptible to runs and pose systematic risks. Toomey worries, he says, that the reforms being considered by the SEC are unworkable and could put money market funds out of business.

Banking regulation is inappropriate for MMFS and would end MMFs as we know them at great cost to the millions of investors who value them for their efficiency and safety, and to the financial system as a whole. 

Already subject to a comprehensive regulatory regime, amendments in 2010 to the rules governing money market funds tightened regulation even further to make money funds more resilient to certain short-term market risks, and to provide greater protections for investors in a money market fund threatening to "break the buck."  More recently, however, Federal Reserve officials and some members of the Financial Stability Oversight Council have said money market funds are subject to runs, a source of systemic risk, and part of a shadow banking system that sorely needs even more regulation.  In response, Melanie L. Fein, former senior legal counsel to the Board of Governors of the Federal Reserve System has published a paper describing why further changes to the money market regulatory regime are unwarranted overkill.

On July 11, the CFTC approved its much awaited final rule implementing the end-user exception from mandatory clearing of swaps. The new ruleslay out parameters of the end-user exception by (1) defining the term “hedging or mitigating commercial risk” and (2) establishing certain reporting requirements for end-users electing to make use of the end-user exception.  In addition, these new rules finalize the definition of "swaps" and trigger compliance requirements under several major CFTC swap market regulations.