Bond Buyer, GFOA on Future Reforms
The Bond Buyer writes, "Issuers hope SEC will roll back Obama-era money market rules," which explains, "Issuers hope the Securities and Exchange Commission's decision to open a comment window on potential money market fund reforms will provide a chance to revive stable net asset values that make it easier for local governments to invest. On Thursday, the SEC requested comment from market participants on potential reform measures to make MMFs more resilient following the intense market volatility that defined the early days of the pandemic lockdown last year. The Government Finance Officers Association plans to ask for a partial rollback of 2016 reforms that would allow institutional MMFs to return to a fixed net asset value." They quote Emily Brock, director of GFOA's federal liaison center, "We have to make sure that as users of these money market funds, as potential investors of these money market funds, that they're available for working capital uses, especially right now.... It's especially important for municipal governments to be able to have access to short-term working capital so we can weather this pandemic." The article continues, "Many governments have policies that require them to invest in financial products with a stable NAV. Governments both invest in and borrow from MMFs and use them to pay for short term costs, such as payroll." The Bond Buyer continues, "At the beginning of the pandemic in March 2020, prime and tax-exempt MMFs had significant outflows. The report found that MMFs experienced and contributed to general stress in the short-term funding markets before the Federal Reserve created backstop programs that helped the markets return to normalcy.... Brock said it makes sense for the SEC to look at market volatility in March and want to make reforms.... 'It makes perfect sense that the SEC would like to say something like let's not put in preventative measures to respond to this, but let's put in preventative measures so this doesn't happen again.'" For more, see these Crane Data News articles: "SEC Wants Comments on PWG Report" (2/8/21); "More on PWG's Grab Bag of Zany MMF Reform Options: WLAs, MBR, LEB?" (12/30/20); and, "PWG Paper Discusses Potential Reform Options for Money Market Funds" (12/24/20).
