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Wednesday, August 29, 2012

SEC Gallagher & Paredes on Regulation of Money Market Funds

SEC Commissioner Daniel Gallagher and Commissioner Troy Paredes released a statement on the regulation on money market funds in response the August 22 statement released by SEC Chairman Mary Schapiro.
After careful consideration, we determined that the changes the Chairman advocated were not supported by the requisite data and analysis, were unlikely to be effective in achieving their primary purpose, and would impose significant costs on issuers and investors while potentially introducing new risks into the nation’s financial system.

Although we cannot support the Chairman’s specific proposals, we are not opposed to further improvements to the Commission’s oversight and regulation of money market funds.

We have urged that the Chairman take a different way forward for strengthening the resiliency of money market funds. This approach would (i) empower money market fund boards to impose “gates” on redemptions; (ii) mandate enhanced disclosure about the risks of investing in money market funds; and (iii) conduct a searching inquiry into, and a critical analysis of, the issues raised by the questions we pose [in this statement].
The Commissioners continue by raising multiple questions about the structure and risks associated with money market funds, requesting the SEC staff, with their best efforts, find answers to the questions so the SEC can conduct detailed research and analysis of the market.

Read the full statement.

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