From the March 2012 issue of Treasury & Risk magazine

The New Spin on Re-Regulation

Rules to make money funds safer run into opposition.

The Reserve Primary Fund’s “breaking the buck” in 2008 sent investors in the $2.7 trillion money-market mutual fund (MMF) market running for the exits and regulators reaching for new rules to safeguard the short-term investments. More than three years later, the Securities and Exchange Commission’s expected proposals for additional safeguards are running into vehement opposition.

The premise of stability was shattered when the net asset value (NAV) of the Reserve fund dropped below $1 a share and investors rushed to redeem their shares. The U.S. Treasury quelled the run by offering to insure MMF holdings.

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