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Rating:Capital Buffers, Floating NAVs on SEC Money Fund Agenda Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, November 14, 2011

Capital Buffers, Floating NAVs on SEC Money Fund Agenda

News summary by MFWire's editors

Mary Schapiro's remarks at the Sifma annual meeting in New York last week is catching the attention of a publication that reaches the advisor crowd. InvestmentNews's key take-away is this: SEC staffers working on money market fund reform are focusing their attention on coming up with a capital buffer reform proposal.

The SEC narrowed its focus after weighing at least eight different options over the past year.

"In assessing potential capital buffer structures, we are examining the pros and cons of various sources of the capital," Schapiro said in her speech. "The capital in a money market fund could come from (1) the fund's sponsor, (2) the fund's shareholders, or (3) the market, through the issuance of debt or a subordinated equity class."

"In addition, we are closely examining the appropriate size of any capital buffer. A challenge is how to establish a capital buffer that offers meaningful protection against unexpected events, without over-protecting and unnecessarily interfering with the prudent and efficient portfolio management of the fund," she continued.

Meanwhile, the floating NAV option is still on the table.

Floating NAVs are one of two reform options the SEC is looking at, Schapiro said, adding that "much of the SEC staff's energy, working jointly with staff from other FSOC member agencies, is focused on developing a meaningful capital buffer reform proposal."

Click here to read the complete speech. 

Edited by: Armie Margaret Lee

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