MMF Reform
In the wake of noncommittal statements from global regulators on ways to address money-market fund systemic risk, the Securities and Exchange Commission has proposed sweeping changes to the 2014 standards adopted after the 2008 crisis. These were viewed as insufficient at the time by the Fed and Treasury. Based on reconsideration of the U.S. framework after the 2020 crisis by the President’s Working Group on Financial Markets, the proposal now would retract the liquidity fee and redemption gates in the current rule. Instead, the Commission would require institutional-prime and institutional tax-exempt funds to adopt swing pricing, sharply hike daily and weekly minimums for liquidity buffers at all MMFs, and institute new reporting and disclosure standards.