SEC holds roundtable on money market funds and systemic risk

Abstract

PurposeThis paper seeks to describe the recent SEC Roundtable on Money Market Funds and Systemic Risk and the context behind the roundtable.Design/methodology/approachThe paper discusses the SEC's roundtable on money market funds. Context to the roundtable is provided by describing recent steps taken by regulators to address risks posed by money funds. The paper also examines the principal topics discussed at the roundtable, including the debate on the systemic risks posed by money funds and potential regulatory changes that could mitigate those risks.FindingsA number of regulatory proposals that were raised at the roundtable could, if adopted by the SEC, significantly alter the operation of money market funds as we know them, including requiring money market funds to institute market‐based net asset value (“NAV”) instead of stable NAV, be subject to banking regulations, create an industry‐funded private liquidity bank, or maintain liquidity reserve requirements.Practical implicationsThe roundtable is significant as it is likely to influence the future discussion of the regulation of money market funds, which has potential implications for both the money management industry and entities financed by money market funds.Originality/valueThe paper provides information on money market reform for investment advisers, broker‐dealers, regulatory lawyers, institutional investors, and investment companies.