Money Market Funds

[Chuckanut]

It appears that the SEC is proposing changes to the rules for the MM accounts we all know and use.

https://www.wsj.com/articles/u-s-ov...t-attempt-to-prevent-bailouts-2f0f2925?page=1

A few quotes for those who can’t get around the paywall:

“The Securities and Exchange Commission voted 3-2 Wednesday to change the rules governing money-market funds, which the Federal Reserve had to backstop with emergency lending facilities in 2008 and 2020. Two previous overhauls by the SEC failed to stop investors from fleeing certain funds en masse when markets faced extreme stress.”

“ That had included a requirement for some funds to implement so-called swing pricing, a mechanism used in Europe that aims to keep investors in the funds from seeing their shares diluted when others pull out in times of stress.

Instead, the final rule requires certain money-market funds used by institutional investors to impose fees when a fund sees daily net redemptions that exceed 5% of net assets. “

“The final rule also requires funds to keep at least 25% of their holdings in assets that mature in one day, up from 10% currently, and at least 50% of their holdings in assets that mature within one week, up from 30% currently. “

 

[audreyh1]

So this is for Money Market Funds, not Money Market Accounts. Money market accounts are not mutual funds investing in short-term paper, they an interest bearing account available from banks, not brokerages.

 

[Spock]

This is the argument for keeping $ in multiple institutions. When throttles are placed on withdrawals you can get your cup filled by tapping multiple spigots.

 

[Chuckanut]

So this is for Money Market Funds, not Money Market Accounts. Money market accounts are not mutual funds investing in short-term paper, they an interest bearing account available from banks, not brokerages.

Correct. My bad for using the wrong word. Perhaps a MoD can change the title.

 

[MarieIG]

Correct. My bad for using the wrong word. Perhaps a MoD can change the title.

Done.