New MM regs.

[Chahta]

Lifted from another site. Some things to be aware of.:

"SEC to Release New Rules for $5.5 Trillion Money-Market Industry

www.bloomberg.com/news/articles/2023-07-06/sec-to-release-new-rules-for-5-5-trillion-money-market-industry?srnd=premium#xj4y7vzkg



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Money-market participants have been bracing for the regulations. As part of its administrative process, the SEC takes into account comments that it receives on proposals before holding a vote to finalize its rules, like the one scheduled for next Wednesday.



If adopted as proposed in December 2021, the new rules would:



Increase the percentage of total assets that funds must maintain in cash or other assets that can be liquidated quickly — to 25% for overnight liquidity and 50% for weekly liquidity



Remove funds’ ability to charge fees for redemptions or temporarily restrict them if liquid assets fall below certain thresholds



Require that institutional prime and tax-exempt funds use a swing pricing mechanism that the agency says forces redeeming shareholders to bear costs of pulling out money



Require that government funds convert to a floating net asset value in the event interest rates turn negative"

[yogibearbull]

Surprise is that they have to fix post-GFC rules that went into effect in 2014/16 so soon. That created 3 types of m-mkt funds:

Government m-mkt funds that are unlikely to impose gates/redemption fees,

Prime-retail m-mkt funds that can impose gates/redemption fees on board votes and without much notice. It would be unwise to use these for check writing,

Prime-institutional m-mkt funds that have floating NAVs, and in addition, can impose gates/redemption fees on board votes and without much notice.

Post 2016 experience was that there was a huge shift into government m-mkt funds. Prime-institutional category was so badly hurt that it even affected the commercial paper market negatively. And that was the motivation to revise m-mkt rules again, so soon.

But as the OP indicates, they have done additional tinkering for other categories. Especially note that gates/redemption fees will be removed and the fall back would be to floating NAV. Moreover, the Prime-institutional will use swing-pricing in addition to floating NAVs.

M-mkt fund operations have become so complicated that many smaller firms have eliminated their m-mkt funds and rely on m-mkt funds from big firms. I was surprised that WellsTrade now does this (I didn't think of it as a small firm), www.mutualfundobserver.com/discuss/discussion/comment/165274/#Comment_165274.

[retiredat48]

Chahta,...thanks for posting.

[johntaylor]

Am mostly in a govt one, but also retain a prime