07.12.23

SEC Scraps Pricing Proposal in Final Money Market Fund Reforms

by: John McCrank

The U.S. Securities and Exchange Commission (SEC) finalized rules aimed at increasing the resilience of money market fund (MMF) industry sans a proposed new pricing model that had been opposed by asset managers. The SEC's decision not to impose "swing pricing" represents a victory for asset managers including BlackRock, Vanguard and Fidelity, which operate some of the industry's largest MMFs. The industry had argued the pricing mechanism, meant to deter hasty investor redemptions in times of market stress, would make MMFs unattractive and be challenging operationally to implement. While industry groups commended the SEC for dropping the swing pricing proposal, they said the decision to impose a liquidity fee instead was problematic. The fee requires MMFs to impose mandatory fees when a fund experiences daily net redemptions that exceed 5% of net assets, unless the fund's liquidity costs are negligible. It also gives a fund's board the discretion to impose a fee if necessary.

Read the full article on Reuters