Money Market Funds and the New SEC RegulationCatherine Chen, Marco Cipriani, Gabriele La Spada, Philip Mulder and Neha Shah No 20170320, Liberty Street Economics from Federal Reserve Bank of New York Abstract: On October 14, 2016, amendments to Securities and Exchange Commission (SEC) rule 2a-7, which governs money market mutual funds (MMFs), went into effect. The changes are designed to reduce MMFs? susceptibility to destabilizing runs and contain two principal requirements. First, institutional prime and muni funds?but not retail or government funds?must now compute their net asset values (NAVs) using market-based factors, thereby abandoning the fixed NAV that had been a hallmark of the MMF industry. Second, all prime and muni funds must adopt a system of gates and fees on redemptions, which can be imposed under certain stress scenarios. This post studies the effect of the amendments on the size and composition of the MMF industry and, in particular, whether MMF investors shifted their assets from prime and muni funds toward government funds in anticipation of the tighter regulatory regime. Keywords: Regulation; Securities and Exchange Commission; Money Market Funds; MMF (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:87183 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC. |
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