Post by yogibearbull on Oct 3, 2023 18:39:56 GMT
Money Market fund (MMF) Reforms 2023
Previous 2014/16 reforms created 3 types of MMFs - Government, Prime-Retail (with gates &/or redemption fees possible), Prime-Institutional (floating NAVs plus gates &/or redemption fees possible).
These reforms caused huge shifts into the Government MMF and were harmful to the commercial paper market. That reduced the overall liquidity.
After considering various ideas (including controversial swing-pricing), the new 2023 MMF Reforms are less controversial. The notion of gates (or redemption suspension) is eliminated, but redemption/liquidity fees may be imposed. But instead of being tied to the weekly liquid asset levels, the liquidity fees may be imposed when there are large daily net redemptions , e.g. 5%+ of the AUM.
LINK
Previous 2014/16 reforms created 3 types of MMFs - Government, Prime-Retail (with gates &/or redemption fees possible), Prime-Institutional (floating NAVs plus gates &/or redemption fees possible).
These reforms caused huge shifts into the Government MMF and were harmful to the commercial paper market. That reduced the overall liquidity.
After considering various ideas (including controversial swing-pricing), the new 2023 MMF Reforms are less controversial. The notion of gates (or redemption suspension) is eliminated, but redemption/liquidity fees may be imposed. But instead of being tied to the weekly liquid asset levels, the liquidity fees may be imposed when there are large daily net redemptions , e.g. 5%+ of the AUM.
LINK