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The Wall Street Journal writes "​Administration Considers Breaking Buck-​a-​Share Rule for Money Funds". It says, "The administration called for new rules to prevent runs on money-​market funds that can pose risks to the entire financial system, as occurred last fall. It urged study of potential solutions such as requiring funds to secure private investors as a backstop or -- more controversially -- dumping the $​1 standard in favor of a floating number. The Securities and Exchange Commission is expected to propose rules next week, and is likely to raise the possibility of a floating number, technically a net asset value. Already, the Investment Company Institute, the lobby for the mutual-​fund industry, is pushing back." The Journal quotes ICI'​s Paul Schott Stevens, "If you float the value of a money fund, you'​ve essentially destroyed the product. We'​re going to explain clearly to the working group why we believe a fluctuating [​NAV] is a very bad idea." The article adds, "But with a floating NAV, many investors might not be able to use money funds for their day-​to-​day cash transactions, said Peter Crane, president of Crane Data LLC, which tracks the funds. The elimination of the $​1 standard 'could cause a major flight from the asset class.'" Finally, the WSJ article says, "In the near term, the SEC is expected to propose shortening the maturity, raising the creditworthiness and increasing liquidity of securities money funds can hold.... `​Another idea the SEC is expected to propose is public disclosure of net asset values to the third decimal. The ICI opposes that, saying fluctuations in the rate could drive investors away from funds."

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Bloomberg writes the "​SEC Said to Back Money Funds on Changes to Protect Investors", which says, "The U.​S. Securities and Exchange Commission may support most of the proposals by asset managers to make money-​market funds safer after last year'​s collapse of Reserve Primary Fund led to a run on the $​3.​5 trillion industry, according to people with knowledge the matter." The official proposed (​not final) changes, expected soon, will be posted on the SEC'​s website.

The Bloomberg article, by Jesse Westbrook and Christopher Condon, cites unidentified sources, saying, "The agency will leave intact rules that allow money funds to carry a stable $​1 share price, said the people, who asked not to be identified because the SEC may revise its plans. While Chairman Mary Schapiro said May 4 that the price rules may need to be altered, the agency instead will seek input on the issue from fund managers and investors, leaving a decision for later."

It continues, "Money funds were concerned that ending the stable $​1 share price would ruin their reputation as the safest investments after insured bank accounts and Treasury debt, said Peter Crane, president of Crane Data LLC, an industry research firm in Westborough, Massachusetts. They sought to steer regulatory changes by offering their own recommendations for protecting investors."

Crane told Bloomberg, "Anything short of radical surgery would be great news for money-​fund providers." The article adds, "The SEC plans at a June 24 public hearing to propose rules similar to those recommended in March by the Investment Company Institute, the fund industry'​s Washington-​based trade group, the people said. They include increasing the proportion of assets a fund must hold in cash, or in securities that can easily be turned into cash, and reducing the average maturity of a fund'​s securities. The agency expects to enact new regulations by yearend."

Finally, Bloomberg says, "The SEC probably won'​t include the variable share price as an official proposal because there has been debate inside the agency, and the industry, about whether it would make sense for all types of money funds, one of the people familiar with the matter said.... After the meeting next week, the SEC will solicit public comments.... The staff then determines whether to make any changes before commissioners hold a second vote to make regulations binding."

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Investment News writes "​Investors yank cash from money market funds", which says, "Wary investors have been steadily moving assets out of safe -- but incredibly low-​yielding -- money market mutual funds in significant numbers since the U.​S. markets bounced off of their lows in early March. More than $​200 billion has been pulled from money market funds since March 11 -- just two days after the Standard & Poor'​s 500 stock index started its nearly 40% ascent through June 8 -- according to data from the Investment Company Institute in Washington."

The article continues, "At the same time, the flight from money market funds is also being fueled by individuals who are simply looking for higher yields on their cash and short-​term investments, noted Peter Crane, president of Crane Data LLC, a Westborough. Mass., money fund consultant."

Investment News quotes Crane, "It'​s always difficult to measure where exactly the assets are going when they move out of money market funds. But with yields on basically all of these funds only slightly above zero, there'​s one place they are definitely going: Anywhere but money market funds."

The article says, "​The typical money market fund tracked in the Crane Money Fund Index was yielding 0.​29% at the start of last week. As a result, advisers are now looking at a number of other options to boost their clients' returns on short-​term holdings."

It adds, "Short-​term-​bond funds, for one, appear to be an increasingly popular parking spot: These funds experienced roughly $​2.​7 billion in net inflows in the month of April alone, according to data from FRC, and more than $​9 billion in total assets year-​to-​date. By comparison, short-​term-​bond funds recorded just $​2.​4 billion in net flows for all of 2008.... Other advisers say that they'​ve been counseling clients to move out of money market funds and into more standard banking accounts. Traditional savings accounts, for one, are yielding more at the moment than most money market funds."

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The LA Times wrote yesterday, "​Sidelined cash is huge, but is it antsy to go somewhere?". The article discusses the "​Wall of Cash" theory and says, "There'​s no doubt that some fickle money-​fund cash will flow into stocks; indeed, after peaking in early January, money fund assets have edged lower as the stock market has surged. But money funds might not provide as much juice as the bulls expect. For one thing, much of the cash flow into money funds over the past two years had little to do with the collapsing stock market, said Peter Crane, chief executive of research firm Crane Data. Corporations, which account for two-​thirds of money-​fund assets, have built up funds for purposes ranging from emergency reserves to bankrolling mergers, and are unlikely to put that cash into stocks, Crane said. That'​s a big reason why overall money-​fund assets are down only 4% from their mid-​January peak despite the torrid market rally since early March." The article quotes Crane, "Money is trickling back in off the sidelines, but the thought that this wall of cash will come pouring back into the market overnight is ridiculous. If it were going to do that, it already would have."

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"​SEC to propose major overhaul of money funds" writes Investment News, saying, "The Securities and Exchange Commission is considering a list of regulations for money market funds that goes far beyond proposed reforms issued in March by the Investment Company Institute. The SEC, which is expected to issue its proposed rules this month, is considering guidelines that would make clear a fund'​s responsibility to turn away influxes of cash from institutional investors that may cause large swings in the fund'​s assets. Beyond those measures, the SEC is considering a rule change that would require funds to disclose regularly the market value of their underlying assets. Currently, money market funds are required to disclose their holdings quarterly, without assigning a market value to those holdings." The article adds, "The SEC is unlikely to endorse the idea of a so-​called floating net asset value, which would untie money market funds from their $​1-​a-​share value, according to a source with knowledge of the commission'​s deliberations, who asked not to be identified." It quotes Peter Crane, president of Crane Data LLC of Westborough, Mass., a research firm that tracks money market mutual funds, "The $​1 [​per share net asset value] holds vast psychological importance. Moving to any other number may shake the faith in the product." IN quotes Crane on the possibility of funds having to disclose actual NAVs, "An investor would see a $​0.​999 NAV and panic, thinking, '​Oh my God, it'​s not $​1.' It would allow for arbitrage, and it [​would] be dangerous in the hands of some investors." "They'​re going to do [​primarily] what the ICI recommended," Mr. Crane predicted.

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