Skip to comments.Suspending Money Market Redemptions Is Now Legal
Posted on 01/27/2010 2:23:13 PM PST by thought
...in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares." Too bad investors' hardships considerations ended up being completely irrelevant.
(Excerpt) Read more at zerohedge.com ...
Deposited in Hong Kong.
Ani’t no such thing with 0.
Investors must then be aware of what securities their money market invests in. This was triggered by the failure of a single money market fund to sustain a Net Asset Value of $1.00, causing an electronic run on the bank. Funds that invest exclusively in primary government paper such as Treasury instruments, won’t be allowed to fail because the Federal Reserve will be called upon to support the liquidity of those instruments.
This means that corporate Treasurers and cash management operations that deal in a lot of money will have to broadly diversify the accounts and institutions they use. Nobody wants to come to payday and not be able to cash their check.
One more little drip, drip, drip of the coming disaster.
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