Financial Stability Oversight Council Proposes Three Alternative Structures For Money Market Funds And Puts Them Out For Comment Hot
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One would be to allow net asset values (NAV) to float by removing the special exemption that currently allows money funds to use either amortized cost accounting or penny rounding to maintain a stable value.
A second option would keep the stable NAV but require a buffer with a tailored amount of assets up to 1% to absorb daily NAV fluctuations.
The buffer would require that 3% of an account holder’s highest account value over $100,000 during the previous 30 days would be made available on a delayed basis. This account value amount is called the minimum balance at risk.
A third option would include both the stable NAV and the buffer but also would add other loss-absorption capacity to enhance the buffer’s effectiveness and possibly increase the resiliency of money market funds.
These other measures could include more stringent diversification requirements, increased minimum liquidity requirements, and more robust disclosure statements.
You can see more detail about the proposed changes here.
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