Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Barclays PLC (ADR) (BCS), General Electric Company (GE): This SEC Move Won’t Kill Your Money Market Fund

Page 1 of 2

Millions of investors use money market funds as a savings-account alternative, relying on their shares to hold their value and produce at least modest income. But ever since the financial crisis, the Securities and Exchange Commission has looked at money market funds as a potential systemic risk, and yesterday, the SEC finally took action that it hopes will shore up their stability.

Although many commentators believe that the stricter regulations on money market funds will make them useless, the particular focus those regulations took should limit their impact for most retail investors. Let’s take a closer look at exactly how the SEC decided to handle the risks involved in the money market fund industry.

General Electric Company (NYSE:GE)

What the SEC did
Yesterday’s ruling approved two proposals that can either stand alone or work in concert. One rule would end the long-standing tradition of having money market fund net asset values fixed at $1 per share, instead allowing the share price to float up or down the same way that stock and bond mutual fund prices do. The other proposal would allow funds to charge exit fees or temporarily stop investors from selling their shares for up to 30 days during times of market stress that affect the liquidity of fund assets.

The key to the proposals, however, is that they don’t affect all money market funds. In particular, the floating-share-price proposal wouldn’t apply to “retail” money market funds, defined as funds that limit daily shareholder redemptions to $1 million or less. In addition, even institutional funds designed for big institutional investors with large liquidity needs would be exempt if they concentrated on government securities rather than commercial paper and other less financially secure debt. Similarly, the proposal on exit fees and temporary sales restrictions wouldn’t apply to government-focused funds, although the SEC didn’t include a retail-fund exclusion.

Did the SEC just make money market funds useless?
Both of these proposals have been in the works for years, and they’ve drawn considerable debate in past iterations. The retail-investor exemption to floating share prices directly addressed concerns that fund giant Fidelity expressed last year that if money market fund prices were allowed to float, more than half of its customers would move some or all of their assets.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!