Divisions at the U.S. Securities and Exchange Commission could prompt a panel of regulators from other agencies to intervene in a debate over strengthening rules governing the $2.6 trillion money-market fund industry, three people familiar with the situation said.
If the SEC is unable to reach agreement, the Financial Stability Oversight Council, established by the 2010 Dodd-Frank Act to monitor large risks to the economy, may decide to officially designate money funds as “systemically important.” That would increase pressure on the SEC to overcome industry opposition and internal disagreements to propose new rules.
All U.S. money funds now hold a combined $2.56 trillion in assets, including $919 billion in institutional prime funds, according to research firm iMoneyNet in Westborough, Massachusetts. The largest funds include JPMorgan Prime Money Market Fund, Fidelity Cash Reserves and Vanguard Prime Money Market Fund.
Commissioner Luis Aguilar, a Democrat, is uncommitted and is seen as the swing vote that could deny Schapiro the majority she would need to issue a proposal for public comment. Aguilar was the general counsel at money-management firm Invesco Ltd. during the 1990s.