Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

SEC’s Plaze Defends Need for Money-Market Fund Reforms

By Melanie Waddell

X
Your article was successfully shared with the contacts you provided.

As the Senate Banking Committee gears up to grill Securities and Exchange Commission Chairwoman Mary Schapiro on Thursday on the agency’s controversial proposed reforms to money-market funds, Robert Plaze, deputy director of the SEC’s Division of Investment Management, defended on Tuesday the need to move ahead with a money-market fund revamp.

“We are working hard to develop proposals that would address the weaknesses in money-market funds and make sure they are around for a long time,” Plaze told mutual fund directors at their annual policy conference in Washington. Money-market fund reform “is one of the areas of unfinished businesses” leftover from the 2008 financial crisis, he said.

In comments to reporters after his remarks, Plaze said that “there is a still a contagion risk in money-market funds,” and that the funds’ “exposure to Europe is something to worry about.”

The SEC has proposed three areas of reform: shifting to a floating net asset value (NAV), establishing capital buffers and imposing redemption restrictions.

Ray Schoen, an analyst with Washington Analysis, says he sees the SEC likely issuing a money-market fund proposal this summer “that is far less onerous for money funds than originally feared (likely focusing on capital buffers).” However, he adds, “we see it as unlikely that the SEC will be able to form a consensus on a final rule anytime soon.”

Instead, Schoen says, “we see the Financial Stability Oversight Council (FSOC) as eventually establishing new regulations and requirements for money funds as part of the nonbank SIFI regime,” referring to systemically important financial institutions.

Plaze also said that once the SEC is done fulfilling its requirements under the Dodd-Frank Act, which should be within the next year, the agency will move to reforms of mutual fund marketing and distribution fees under Rule 12b-1.

While the SEC visited such reforms a few years ago, any new reforms would have to consider the fact that mutual funds now have a new competitor, exchange-traded funds (ETFs), he said.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.