WASHINGTON—“U.S. securities regulators, under pressure from the asset-management industry, are preparing to exempt a majority of money-market mutual funds from a central plank of rules intended to curb risks in the $2.6 trillion market, according to people familiar with the agency’s discussions.”
“The Securities and Exchange Commission, poised to implement structural changes to money funds in coming months, is expected to broaden an exemption for mom-and-pop retail investors from requirements that certain money funds abandon their signature $1 share price and float in value like other mutual funds, these people said.Supporters of a floating share price argue it would train investors to accept slight fluctuations in the value of their shares and so not panic if they fall below the $1 price.”
“The revised approach would mark a victory for mutual-fund companies that have pressed the SEC to scale back provisions from a June proposal. It also would deal a blow to other regulators, including 12 regional Federal Reserve Bank presidents, who have argued for tougher rules requiring more funds, including those catering to retail investors, to float share prices.”
“The expected broadened exemption for retail investors is the latest sign the SEC is primarily focused on preventing the kinds of problems that occurred during the 2008 financial crisis, when large institutions stampeded out of the funds. Retail investors, who tend to react more slowly, left money funds, too, but at a much slower pace before the government backstopped the industry, halting the exodus.”
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