USD $ 2.6 trillion money market fund industry part will be asked to fundamentally change the price of the shares issued by the U.S. regulatory agency's suggestion, last Wednesday sudden withdrawals, in order to reduce risk.
But the United States Securities and Exchange Commission's plan is not so strict, some market participants worry that including industry favored a provision of funds to collect ATM fees, and delayed return of funds to customers during the financial crisis.
More than a year in the United States Securities and Exchange Commission has debated the changes made in 2010 is adequate to avoid duplication of a run on money market funds saw the height of the financial crisis.
Last Wednesday's further reforms did not go as far as possible, the draft proposal floated last year by the then Chairman of the U.S. Securities and Exchange Commission, Mary Schapiro, who left in December.
Has warned that further significant reform fund industry that can kill in money market fund investors' interests.
In a compromise move, the U.S. Securities and Exchange Commission's new plan focused on institutional investors, which is seen as more likely to run in gold funds, because these investors are more sophisticated and easier to pull chunks of money in a panic.
U.S. Securities and Exchange Commission estimates that institutional funds $ 1 trillion in assets accounted for 37% market share.
U.S. Securities and Exchange Commission plans call for it says can be used alone or in combination of two alternative proposals.
The first thing to quality institutional investors funds for transition from a stable $ 1 per share net asset value of the floating (NAV).
This reform is a direct response to what happened in 2008 when the Reserve Primary Fund, the largest and one of the monetary fund, Lehman Brothers debt loss, unable to maintain the per share price, known as the "broken down pressure. "
Lighted running across the money market fund industry investors, cut off the main source of overnight funds, many companies.
U.S. Securities and Exchange Commission said the retail and government funds, which is not considered to be running at the same risk, will not have to move to a floating net asset value. Retail funds is defined as one million U.S. dollars daily limit shareholder redemptions.
Government funds will be limited to the national debt, but the U.S. Securities and Exchange Commission said the majority of the fund's tax-free sales of state and local government debt will qualify as retail funds.
The industry has long fought against away from a stable share price, it is said to be attractive to investors looking for safe products.
The second proposal would give Fund Board institutional and retail funds the power to impose the so-called "liquidity fees and redemption gate", in periods of tension.
This will allow investors to fund power to stop outflow of funds, an idea, the U.S. Securities and Exchange Commission, two Republican members said last year that they may be able to support.
Shapiro said in a statement praised the movement for a proposal, but he said, "I hope that the Commission will maintain meaningful reform and opening up the entire industry, not just institutions gold fund."
Five members voted unanimously on Wednesday, the plan for 90 days of public comment.
Resistance to change
Over the years, further reform proponents, money market funds, mutual funds, investment in short-term debt securities, can be considered safe, because bank deposits, even if they do not have government guarantees attention.
In 2010, after the financial crisis, the U.S. Securities and Exchange Commission adopted, driven fund transparency, tightening credit standards of quality and shorten the maturity of the Fund's investments, implementation of the new liquidity requirements of the rule.
The SEC announced Wednesday plans for about 700 more than a year after infighting in the institution whether and how to develop, further rules for the industry.
Major capital fund sponsors major structural changes like Fidelity and trade groups such as the American Chamber of Commerce actively lobbying against it. But at least there are some new rules and did not let the pressure, and several major fund sponsors, including Charles Schwab (Charles Schwab) began offering a compromise measure.
Paul Schott Stevens, Investment Company Institute, the main money market fund transactions regiment, said he was "particularly pleased that the Committee recognized that effective liquidity costs and gates, in response to a risk that may arise general crisis. "
But federal investment fund manager, said the company issued a statement responding floating NAV idea is particularly disturbing suggestion.
"This proposed change will be significantly reduced or completely eliminate the utility of money market funds, people who depend on them for millions of Americans," Federal said.
Chamber of Commerce said in a statement that the proposal reserved judgment, but it is still "concern" aspects of the rules, such as a floating net asset value and the potential accounting and tax burdens imposed on investors.
The industry fears that it may have a significant floating net asset value of the tax burden will require investors to report daily gains and losses.
U.S. Securities and Exchange Commission officials told reporters that they expect the IRS agreed to allow the floating net asset value of the Fund's investors may only be reported once a year.
"This is a journey, and this, said:" The U.S. Securities and Exchange Commission Chairman Mary Jo White, who took over the agency this spring.
While acknowledging the achievements of some of the reform advocates say, Shapiro suggested a significantly dilute the proposal on Wednesday. She is considering measures such as capital buffers and redemption holding device, or broader switch floating net asset value.
Former U.S. Securities and Exchange Commission Chairman Arthur Levitt, who has been pushing for reform, all of the money market funds for many years, said Wednesday that the plan is significant, but still disappointing. "It is very unfortunate that the rules of the commission is unable to connect, Mary Schapiro had actively supported," Leavitt told the Reuters Global Wealth Management Summit.
Bell (Sheila Bair), the Federal Deposit Insurance Corporation (FDIC) of the former official said, "I fear it falls on what is necessary to protect the taxpayer, mutual fund investors and the stability of the financial system."
The way forward
While members supported the plan to collect feedback, it is unclear whether they would agree to the final rule.
Several members suggested that they have different views on how to proceed. Democratic and Republican members of the Commissioner Elisse Walter Daniel Gallagher said that taking into account the recommendations tandem open.
Republican Commissioner Troy Paredes, meanwhile, said he was "not convinced, floating net asset value is justified."
But it is possible, Walter and Paredes will not vote at the SEC's final rule, President Obama's recent nomination of two new members to replace them.
The plan is also significantly different from the idea floated by the Financial Stability Oversight Council, chaired by the Treasury of a group of financial regulators, after the intervention of the IMF reform stalled last year, in its recommendations, including capital buffer.
Ministry of Finance said in a statement praised the U.S. Securities and Exchange Commission to continue working on this issue. Ministry of Finance, said: "We look forward to reviewing the details of the proposed rule,."
 



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