As permitted by the Dodd-Frank Act,  the FSOC has outlined options it could recommend to the SEC if it is determined that MMFs are a systemic activity or practice.  Doing so would not force the SEC’s hand, as the law does not allow FSOC to dictate rules for primary supervisors, but the FSOC hopes it would lead to more consensus on the SEC in favor of one of these options or to another approach that would alleviate the systemic risk FSOC fears results from MMFs.  The options would either require a shift to floating net asset values (NAVs) or, if a fixed NAV is retained, the imposition of various combinations of NAV buffers, liquidity restrictions on shareholders and, perhaps, additional governance and prudential measures. The FSOC acknowledges that these reforms could reduce investor return and, in certain cases, lead investors to use other products or restructure the manner in which MMFs are offered, but its detailed market and macroeconomic analysis leads it still to assert that substantive MMF reform is required and that it will have little long-term adverse impact.

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