On February 4, 2021, the SEC published a request for public comment concerning potential reform measures to enhance the resilience of money market funds, which are utilized by both large institutions and individual retail investors and play a substantial role in short-term funding markets. This topic is given special attention in a report of the President's Working Group on Financial Markets published in December 2020. The SEC expects that comments received will help the agency and other relevant financial regulators in further analysis of potential reforms.
The report found that some short-term funding markets experienced stress in March 2020 amidst economic concerns associated with the onset of the COVID-19 pandemic. The report also determined that more action must be taken to lower the risk that structural vulnerabilities in tax-exempt and prime money market funds could lead to or heighten stress in short-term funding markets.
The following topics were also highlighted in the publication:
- events in certain short-term funding markets in March 2020
- prior money market fund reforms
- the evolution of different types of money market funds since the 2008 financial crisis
- various reform measures that policymakers could consider
The SEC encourages interested parties to submit remarks on matters related to potential money market fund reforms, including other approaches to reform. Where possible, commenters should include empirical data and other information to support their comments. The public comment period will remain open for 60 days following publication of the request for comment in the Federal Register. Comments may be submitted electronically via the SEC’s internet submission form or emailed to rule-comments@sec.gov. Paper submissions may be mailed to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. Submissions should refer to File Number S7-01-21. Information that is submitted will become part of the meeting’s public record and posted on the SEC’s website at sec.gov.
Sources:
SEC Requests Comment on Potential Money Market Fund Reform Options Highlighted in President’s Working Group Report (sec.gov)
Request for Comment on Potential Money Market Fund Reform Measures in President’s Working Group Report (sec.gov)
