I wrote a post last May about SEC proposals to reform the money market fund industry. At the time, it appeared that the SEC was considering rules that would either require money funds to maintain a loss reserve, or float the NAV. My observation was that the proposals would doom money funds as we know them, essentially turning them into short-term bond funds. Even, so the post listed options for investors that would address most needs.
Now, Investment News has is reporting that the Chair of the SEC notes the objections raised during the comment period for the reforms. However, the all-knowing SEC has determined that "risk isn't priced into the product" and therefore must kill the product in order to save it.
Fortunately, the options remain. Most brokerage (and clearing) firms continue to offer FDIC insured cash management accounts, what amounts to a checking account with almost all of the services associated with money market fund accounts. Forward looking advisors will be preparing their clients to make the switch when the SEC money market rules are adopted.
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