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New Money Fund Rules Won't Hurt Debt Issuers, Study Says

SEC report argues that non-financial companies don't rely heavily on funds, while financial firms can find other funding.

By Christopher Condon, Bloomberg | Updated on December 07, 2012

The mutual fund industry’s argument that new money-market fund rules would hurt companies, states and cities that sell short-term debt has been contradicted in a new Securities and Exchange Commission study.

Should new rules shrink money funds, non-financial companies wouldn’t be significantly affected because they don’t lean heavily on the funds, while banks are well suited to find alternative funding, according to the report prepared by SEC staff for three commissioners. The report also said a reduction in demand by money funds wouldn’t necessarily cause a drop in demand for short-term debt.

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