U.S. Sen. Pat Toomey (R-PA) sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler on the SEC’s proposed amendments to money market fund rules.
On December 15, the SEC proposed amendments that would increase liquidity requirements for money market funds to provide a more substantial liquidity buffer in the event of rapid redemptions. They would also remove provisions in the current rule requiring a money market fund to impose liquidity fees or to suspend redemptions through a gate when a fund’s liquidity drops below an identified threshold. Further, the proposal would require institutional prime and institutional tax-exempt money market funds to implement swing pricing policies and procedures that would require redeeming investors, under certain circumstances, to bear the liquidity costs of their redemptions.
“Money market mutual funds are a valuable investment option for retail investors, an essential cash management tool for institutional investors, and a vital source of funding for governments and corporations,” Toomey wrote to Gensler. “As you stated during your confirmation process, regulations should ‘ensure access to investors’ for MMFs ‘while also ensuring stability in our financial system.’”
Toomey is ranking member of the U.S. Senate Banking Committee.
“The U.S. economy faces sustained high inflation and will see the money supply decrease to combat this inflation,” Toomey added. “Given these conditions, the need for a product that allows investors to obtain a higher return on investment while facilitating the provision of much-needed capital to municipalities and corporations is as vital as ever.”