SEC Proposed Reforms to Money Market Mutual Funds

On Wednesday, June 5, 2013, the Securities and Exchange Commission (“SEC”) introduced a series of proposed reforms regarding Money Market Mutual Funds (“MMFs”). The two main provisions of the proposed reforms require: (1) a floating Net Asset Value (“FNAV”) for prime institutional MMFs; and (2) the imposition of liquidity fees if a fund’s weekly liquid assets fall below a certain threshold, in conjunction with redemption suspensions, or gates, during times of market stress (“Fees and Gates”). The SEC recommended taking one or both of the main proposed reforms in conjunction with any number of other proposed measures including but not limited to: enhanced stress-testing requirements; enhanced disclosures; and more stringent diversification requirements. The proposed reforms include a compliance date of 2 years to provide time for MMFs to convert to a FNAV. By David E. Franasiak, Joel Oswald, Eric Robins and Alison Kelly.

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