Explainer: Why is the U.S. SEC reforming money market funds?

Signage is seen at the headquarters of the U.S. Securities and Exchange Commission in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kellylong-awaited regulations to improve the resilience and transparency of the roughly $5.5 trillion U.S. money market fund industry.

All the major asset managers and bank groups, including BlackRock, Vanguard, Fidelity and Goldman Sachs offer money market funds.Because money market fund investors generally expect immediate liquidity with little volatility, they are easily spooked when those expectations are not met during market stress.

The panic was reminiscent of 2008 when a run on money market funds threatened to freeze up global markets and prompted the government to backstop the sector. First, it boost funds' liquidity so they can more easily meet redemptions. Currently, at least 10% of funds' total assets must be held in daily liquid assets, and at least 30% of total assets must be held in weekly liquid assets. The SEC is raising that to 25% and 50%, respectively.

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Regulators Take Another Crack at Shoring Up Money-Market Funds to Prevent BailoutsU.S. regulators are taking their third shot in 15 years at rewriting rules for money-market funds to prevent them from needing bailouts in times of financial turmoil, as investors pour money into the funds this year
Source: WSJ - 🏆 98. / 63 Read more »

SEC to finalize money market fund reforms aimed at boosting resilienceThe U.S. Securities and Exchange Commission (SEC) is expected on Wednesday to finalize rules aimed at increasing the resilience of the $5.5 trillion money market fund industry after it received government support during the 2020 market turmoil, according to its public agenda.
Source: Reuters - 🏆 2. / 97 Read more »

Explainer: Boosting the City: Part Two of UK's post-Brexit finance reformsBritain's finance minister Jeremy Hunt has set out proposals to unlock at least 50 billion pounds ($64 billion) in investments to bolster London as a competitive global financial centre.
Source: Reuters - 🏆 2. / 97 Read more »