Money Market Funds
Money market funds are a type of mutual fund developed in the 1970s as an option for investors to purchase a pool of securities that generally provided higher returns than interest-bearing bank accounts. They have since grown significantly and currently hold more than $2.9 trillion in assets, the majority of which is in institutional funds. There are many kinds of money market funds, including ones that invest primarily in government securities, tax-exempt municipal securities, or corporate debt securities. Money market funds that primarily invest in corporate debt securities are referred to as prime funds.
In response to the 2007-2008 financial crisis, the Commission adopted a series of amendments to its rules on money market funds in 2010 that were designed to make money market funds more resilient by reducing the interest rate, credit, and liquidity risks of their portfolios. Although these reforms improved money market fund resiliency, the Commission said at the time that it would continue to consider whether further, more fundamental changes to money market fund regulation might be warranted. Accordingly, on June 5, 2013, the Commission voted unanimously to propose additional measures that would reform the way that money market funds operate to make them less susceptible to runs that could harm investors.
The SEC's proposal contained two principal alternative reforms that could be adopted alone or in combination, and additional diversification and disclosure measures that would apply under either alternative. One alternative called for a floating net asset value (NAV) for prime institutional money market funds and the other would allow the use of liquidity fees and redemption gates in times of stress.
The SEC voted on July 23, 2014, to require a floating NAV for prime institutional money market funds and provide non-government money market fund boards with new tools — liquidity fees and redemption gates — to address runs.
This page contains links to SEC regulatory initiatives concerning money market funds, to analysis, research, and other resources from the SEC, and to public comments received on the various rules and reports regarding money market funds.
Information and Guidance
President's Working Group Report on Money Market Fund Reform (Release No. IC-29497)
November 3, 2010
- Response to Questions Posed by Commissioners Aguilar, Paredes, and Gallagher
November 30, 2012