SEC’s Plaze Defends Need for Money-Market Fund Reforms

Ray Schoen, an analyst with Washington Analysis, says he sees the SEC likely issuing a money-market fund proposal this summer "that is far less onerous for money funds than originally feared (likely focusing on capital buffers)." However, he adds, "we see it as unlikely that the SEC will be able to form a consensus on a final rule anytime soon."

Instead, Schoen says, "we see the Financial Stability Oversight Council (FSOC) as eventually establishing new regulations and requirements for money funds as part of the nonbank SIFI regime," referring to systemically important financial institutions.

Plaze also said that once the SEC is done fulfilling its requirements under the Dodd-Frank Act, which should be within the next year, the agency will move to reforms of mutual fund marketing and distribution fees under Rule 12b-1.

While the SEC visited such reforms a few years ago, any new reforms would have to consider the fact that mutual funds now have a new competitor, exchange-traded funds (ETFs), he said.