Money-market funds should have limits imposed on the riskiness of their investments and should conduct regular stress tests, a global body of markets regulators said.
“Funds should not take direct or indirect exposures to equities or commodities,” the International Organization of Securities Commissions said in a report on its website today. The funds, which invest in short-term debt, should hold buffers of liquid assets to prevent runs, IOSCO said.
“Some important measures have been taken to reform the MMF industry,” IOSCO said in the report. “These funds may still present vulnerabilities which could have broader consequences for the financial system.”
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