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Wednesday, January 16, 2013

FSOC Extends Comment Deadline on Proposed MMMF Reform Recommendations

The Financial Stability Oversight Council late yesterday extended from Jan. 18 to Feb. 15 the comment deadline on its proposed recommendations to reform the money market mutual fund industry.

The FSOC’s three proposed recommendations would require funds to float their net asset values, rather than fixing values at $1 a share; hold a stable NAV and maintain a buffer of capital to absorb day-to-day fluctuations in value; or keep a risk-based NAV buffer of 3 percent combined with other measures to increase their resilience.

“The … proposed recommendations are not mutually exclusive and could be implemented in combination to address the structural vulnerabilities that result in the susceptibility of MMFs to runs,” the FSOC said. The council added that it also is seeking comments on other potential reforms that could address those vulnerabilities and mitigate the risk of runs.

Read more.
Read the FSOC’s proposed recommendations.

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