As Securities and Exchange Commission Chairwoman Mary Jo White warned in early May, the agency is poised next week to propose further changes to money-market funds.
Washington insiders have speculated for some time that the new proposed rule will include a floating net asset value (NAV), for at least some of the riskiest funds.
Analysts at Washington Analysis said Thursday that they expect the SEC’s proposed rule to be “less onerous than past proposals, but strict enough to create headwinds for the industry.” Indeed, the analysts say that the most likely changes to be enacted by the commission will be a floating NAV for institutional prime money funds, “as well as some combination of liquidity fees and temporary gates prohibiting redemptions during times of stress.”
White has said the goal with further money-market fund reform is “to preserve the economic benefits of the product while addressing potential redemption pressures and the susceptibility of these funds to runs—runs in which retail investors are especially likely to suffer losses.”