The U.S. Securities and Exchange Commission will soon propose revamping rules for money-market mutual funds, pushing the options of a floating net asset value and capital buffers, SEC Chairman Mary Schapiro said today.
"Money-market funds, while perhaps not the cause of the downward spiral of events, certainly exacerbated the financial breakdown," Schapiro said in remarks prepared for a Securities Industry and Financial Markets Association conference in New York. The SEC is pursuing "further structural reform" in the $2.6 trillion industry, she said.
Regulators have been working to make U.S. money funds safer and more stable since the Sept. 16, 2008, collapse of the $62.5 billion Reserve Primary Fund. Spooked by the fund's closure, investors withdrew about $310 billion from prime money funds that week, helping to freeze global credit markets. The Treasury and Federal Reserve stepped in with guarantees and other steps to stop the run.
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