WASHINGTON — The Securities and Exchange Commission will release new rules for the reform of money market mutual funds "in the near term," although it has not decided whether they should would apply to municipal funds, SEC chairman Mary Jo White told a House panel Tuesday,
White made the comment during questioning by members of the House Financial Services Committee, who wanted an update on her thinking and worried that the SEC's proposed MMF reforms could negatively impact local governments.
The SEC proposed last fall to move most MMFs to a floating net asset value from the current stable NAV of $1 per share. It also proposed funds put in place liquidity fees and gates to discourage redemptions.
Muni market participants and lawmakers have warned that a floating NAV could reduce the popularity of MMFs, which are huge purchasers of short-term local debt. State officials have also pointed out that such a requirement could force governments to abandon local government investment pools that provide liquidity for municipalities and are required to meet MMF rules under accounting standards.
Committee members had expressed concern about the proposals during White's previous appearance before them earlier this year. She has also received letters from Senators and industry groups on the opposing the proposed reforms.
Asked point-blank whether the commission will exempt muni MMFs from the proposed reforms, White declined to commit.
"That's certainly one of the issues that we're acutely focused on," she said.
White used her testimony to describe the commission's recent activities and objectives, and told the panel that her agency needs the president's full nearly $1.7 billion budget request to adequately fulfill its responsibilities. The SEC is to receive $1.35 billion under Congress' 2014 omnibus spending agreement.
