CMFI Files Comment Letter on Proposed Money Market Fund Reforms

Earlier today, the Coalition of Mutual Fund Investors (“CMFI”) filed a comment letter with the Securities and Exchange Commission (“SEC”) on the agency’s proposed rules governing money market funds.


In its letter, CMFI asserted that several of the SEC’s regulatory proposals—including the retail exemption concept and the imposition of redemption fees in a liquidity crisis—create the need to provide money market funds with transparency into omnibus accounts used by broker-dealers and other financial intermediaries.


CMFI believes this can be best accomplished by amending SEC Rule 22c-2, to provide for information-sharing between money market funds and their intermediaries about the identity and transactions of underlying shareholders, preferably on a daily basis or as fund orders are processed.


Transparency into omnibus accounts would also improve the ability of money market funds to comply with the SEC’s general liquidity requirement in its current regulations, in which each fund is expected to evaluate—on an ongoing basis—the risk characteristics of its shareholders and maintain appropriate liquidity cushions to meet reasonably foreseeable redemptions.


Additionally, a regulatory solution to the omnibus account transparency problem has the added benefit of resolving several other regulatory compliance issues, such as the inability of funds to apply market timing restrictions and sales load discounts in a uniform manner.


Click here to review this CMFI comment letter:


Thank you for your interest in the Coalition of Mutual Fund Investors.


Niels Holch

Executive Director