Treasury Strategies writes "Proposed Holdback Requirement for Money Market Mutual Funds: Ineffective & Crippling Regulation". The paper says, "In response to recent calls by regulators to impose a capital requirement on money market mutual funds, Treasury Strategies, Inc. has prepared the following analysis and critique. Treasury Strategies (TSI) is the world's leading Treasury consulting firm working with corporations and financial institutions in the areas of treasury, liquidity, and payments. Regulators have periodically called for money market mutual fund (MMF) reforms in recent years, despite their nearly flawless track record. During their 40-year history there have only been two instances of any MMF investors incurring even a small loss. Although it has demonstrated remarkable reliability, the $2.6 trillion MMF industry is in danger of being dismantled by the current ill-considered reform proposals. One ill-conceived proposal discussed by regulators is a holdback provision on redemptions. Although regulators have not shared specifics with the industry and the general public, the broad outlines are that 3% to 5% of each MMF redemption be withheld from the investor for a thirty-day period, thereby discouraging redemptions in the first place."
