Mary Schapiro, Chairman of the U.S. Securities and Exchange Commission, canceled a vote on a proposal to tighten money-market fund rules amid opposition from fellow commissioners and a lobbying campaign by fund companies.
Three of the five commissioners told her they wouldn’t support her proposal, Schapiro said in a statement today. Other policy makers should address “one of the pieces of unfinished business from the financial crisis,” Schapiro said.
“The declaration by the three commissioners that they will not vote to propose reform now provides the needed clarity for other policy makers as they consider ways to address the systemic risks posed by money-market funds,” she said in the statement. “I urge them to act.”
Schapiro, backed by the Federal Reserve, has worked to make money funds more stable since the collapse of the $62.5 billion Reserve Primary Fund in September 2008. Its closing triggered a wider run on money funds, helping to freeze global credit markets.
The announcement marks a victory for the mutual-fund industry, which has lobbied against the Schapiro proposal. The plan called for funds to abandon their traditional $1 share price, or to adopt capital buffers and redemption restrictions, changes executives said would destroy products that manage $2.6 trillion for U.S. companies and households.
A vote on the proposal was expected to happen as early as Aug. 29, though it hadn’t been formally scheduled. The New York Times reported Schapiro’s decision to cancel the vote earlier today.