August 28, 2012
On August 28, Securities and Exchange Commission (SEC) Commissioners Daniel Gallagher and Troy Paredes released a statement in response to SEC Chairman Mary Schapiro’s August 22, 2012 announcement that three of the five SEC Commissioners would not support a staff proposal to reform the structure of money market funds, meaning the proposal will not be published for public comment or called to a vote at a public SEC meeting. The statement by Commissioners Gallagher and Paredes clarifies that they did not support the proposal advocated by Chairman Schapiro due to concerns that the changes were unsupported by the available data and analysis, were unlikely to effectively prevent runs on money market funds, and would impose additional costs on issuers and investors and potentially introduce new risks into the financial system. Alternatively, the Commissioners express their support for money market fund reforms that would empower money market fund boards to impose “gates” on redemptions and mandate enhanced disclosure about the risks of investing in money market funds. As part of this approach, the SEC would conduct an inquiry into and analysis of a number of unaddressed issues and questions in order to inform further action. In addition, on August 25, the Chairman of the Board of the International Organization of Securities Commissions (IOSCO), Masamichi Kono, also issued a statement in response to Chairman Schapiro’s statement, reaffirming IOSCO’s commitment to developing policy recommendations for oversight and regulation of the so-called shadow banking system, including money market funds. He added that the IOSCO Committee on Investment Management will meet shortly to consider comments received in response to its April 27, 2012 consultation report entitled, “Money Market Fund Systemic Risk Analysis and Reform Options.”
Commissioners’ Joint Statement
Chairman Kono’s Statement
Chairman Schapiro’s Statement, which includes history and background on money market fund reforms
IOSCO Consultation Report: Money Market Fund Systemic Risk Analysis and Reform Options – April 27, 2012