Skip to comments.SEC proposes changes to money market fund rules
Posted on 06/05/2013 3:10:48 PM PDT by Whenifhow
The portion of the money market fund industry that suffered extreme disruptions during the financial crisis would be revamped under a plan proposed Wednesday by federal regulators, who have been struggling to address the industrys vulnerabilities for years.
The Securities and Exchange Commission unanimously approved the proposal after what SEC Chairman Mary Jo White described as a journey. The industry once fiercely opposed dramatic changes to money market funds, but regulators persisted, citing the losses and panic they sparked during the financial crisis.
These types of mutual funds are popular with investors because theyre perceived to be as reliable as a savings account. But that perception was shattered when a major money market fund broke the buck when its value fell below $1 a share in September 2008. A run on money market funds ensued, with investors withdrawing $300 billion that week. The government intervened, temporarily guaranteeing that investors would be repaid.
On Wednesday, the SEC said its plan is designed to avoid a repeat of the meltdown.
The agency offered two alternatives focused solely on prime funds, which invest in short-term corporate debt. They could be adopted separately or in combination, depending on the public feedback it receives over the next three months. The SEC could finalize the plan late this year or early next, experts who track the issue said.
The most dramatic of the options would allow the value of the shares in certain prime funds to fluctuate; the other would allow all prime funds to temporarily block withdrawals and impose fees on investors during times of stress.
(Excerpt) Read more at washingtonpost.com ...
Doesn’t the SEC have enough to worry about with trying to maintain parity in the conference? I mean Alabama has won the National Championship 2 years running. They need to quit dabbling in money stuff and take care of the conference issues.
When they change the rules on the fly, someone is set up to die.
SEC = Securities and Exchange Commission
They want to prevent a “run” on money market funds.
Last paragraph of article:
Less controversial has been the idea of having money market funds impose fees or bar withdrawals in times of stress. The second option proposed by the SEC would do that. If a non-government money market funds weekly liquid assets fall below 15 percent of its total assets, it would have to impose a 2 percent fee on withdrawals, unless its board of directors decides that the fee works against the funds interests. A fund could also temporarily bar withdrawals once a it has crossed that liquid asset threshold.
Sounds suspiciously like a Crete solution.
Should be “Cyprus.”
Sounds suspiciously like a Cyprus solution.
If you tried to get your money out in one day, you cant. Banks simply do not have the cash in the bank for withdrawal. If you want a large sum you may have to wait a week or longer.
They will start by manipulating the accounts. What you see on your statement is not what you actually have in there on any given day. They may borrow from one account for a little while - and for a little while longer they will replace it but I bet that won’t last much longer - they will just take it.
I should have included the /s tag :)
Slamming The Money Market Gates Capital Controls Coming To $2.6 Trillion Industry
at the end of the article
And if the industry is onboard, all the token SEC votes needed to enforce the plan will be in place.
At that point money markets will merely be the latest experiment in behavioral control: how to spook those with money in the multi-trillion industry enough to where they pull their cash and either spend it on trinkets, boosting inflation - a very welcome outcome for the Chairman - or merely investing it in the “stock market.” Perhaps instead of a lock up, at times of crisis MMF investors will be given the opion of allocating funds to the Solyndra du jour (a la the Cyprus bank bailout) or lose all the money.
We are confident the central planners will find a way,
I seriously seriously posted that as sarcasm. I have traded futures and stocks for many years and certainly know the difference between the Securities Exchange Commission and the Southeastern Conference. :) smiles ROLL TIDE!