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.