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Friday, April 26, 2013

FSOC Urges Action on Money Markets, Libor

The Financial Stability Oversight Council (FSOC) recommended that the SEC take action to reduce volatility and risk in money market mutual funds. It also urged regulators to develop alternative reference interest rates to Libor, which investigators found has been subject to manipulation.

The FSOC outlined three options for SEC action, based on FSOC proposals last fall: requiring a floating net asset value; requiring a stable NAV with a buffer to handle daily fluctuations; or combining a stable NAV and buffer with other measures, such as stricter diversification, disclosure or liquidity requirements.

The FSOC's annual report offered several other recommendations for greater stability, including increasing private activity in the mortgage market, raising awareness of interest rate risk, and resolving long-run fiscal imbalances.

Read the report.

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