The Securities and Exchange Commission voted on June 24 to propose new rules to strengthen the regulations for money market funds that would make them more resilient to economic stresses.
The proposed amendments would require that money market funds have certain minimum percentages of their assets in cash, or securities that can be readily converted to cash, to pay redeeming investors. The SEC has also proposed shortening the weighted average maturity limits for money market fund portfolios from 90 days to 60 days, limiting funds to investing in only the highest quality securities, which would eliminate their ability to invest in so-called "second-tier" securities, and require funds to stress test portfolios periodically to determine whether it can withstand market turbulence.
Money market funds would also be required to report their portfolio holdings monthly to the SEC and post them on their Web sites and call for funds to be able to process purchases and redemptions at a price other than $1, the agency proposed.
Public comments on the proposed rule amendments must be received by the commission within 60 days after their publication in the Federal Register. The SEC said it will post the proposed changes on its site as soon as possible.