Schapiro Comes Up Short on SEC Money Fund Reform
Policy + Politics

Schapiro Comes Up Short on SEC Money Fund Reform

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A bid by Securities and Exchange Commission Chair Mary Schapiro to impose extra rules on the $2.4 trillion U.S. money market mutual funds industry has been blocked by a majority of the commission's members, she said in a statement on Wednesday evening.

In a statement sent by an SEC spokesman, Schapiro said the declaration by three other commissioners that they would not support the extra measures "now provides the needed clarity for other policymakers as they consider ways to address the systemic risks posed by money market funds. I urge them to act with the same determination that the staff of the SEC has displayed over the past two years."

Schapiro and regulators from other agencies including the Federal Reserve had sought restrictions on the vehicles beyond rule changes in 2010.

Many had expected the SEC would put forward for public comment staff proposals like requiring the money funds to adopt capital buffers and redemption restrictions, or to abandon their traditional $1 per share net asset value.

Schapiro and allies wanted such changes to make the funds more robust after problems during the financial crisis. But fund companies and some experts worried changes would upset the money funds' central functions in the financial system, as major buyers of institutional debt. Major fund sponsors including Fidelity Investments of Boston and Federated Investors Inc of Pittsburgh.