Fidelity Investments [profile] has declared that it would support charging a 1 percent redemption fee on large institutional money funds during times of extreme market stress, according to Reuters.

The newswire notes that the $2.5 trillion money fund industry has been battling U.S. regulators over reform proposals that Boston-based Fidelity and other providers say could wreck the industry. But in recent weeks, Fidelity has acknowledged that institutional prime money market funds are vulnerable to large, abrupt redemptions in times of financial turmoil.

Reuters reports that in a speech planned for Tuesday afternoon, Nancy Prior, stated in her prepared remarks that "We believe that halting redemptions or charging a fee when liquidity is scarce is the only effective means of stopping large, sudden outflows."

In the prepared remarks, she adds that "this would be a far more effective means of addressing a clearly defined issue within one specific segment of the (money market fund) product."

The remarks were planned for the iMoneyNet Investor conference in Orlando, Florida. Fidelity manages more than $430 billion in money fund assets, according to Reuters.

In a separate story, Reuters reports that SEC chair nominee Mary White says that the securities regulator take the lead on money fund reform and not the Financial Stability Oversight Council. 

Edited by: Tommy Fernandez


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