Regulators yesterday imposed new restrictions on a vast market that played a significant role in the 2008 financial crisis, The New York Times Dealbook reported yesterday. The Securities and Exchange Commission voted 3-2 to adopt a new set of rules for money market funds, a $2.6 trillion industry where ordinary individuals and sophisticated institutions alike park their money. The rules come after years of debate among regulators and lobbying from Wall Street, and “will reduce the risk of runs in money market funds and provide important new tools that will help further protect investors and the financial system,” said SEC Chairwoman Mary Jo White. The split on the commission reflected the lingering frustrations still felt by many in the debate about money market funds. The approved rules aim to prevent any future runs through a combination of measures. In one important change, certain money market funds will have to report a floating net asset value instead of a fixed value of $1 a share. This change is meant to remind investors that the funds are not without risk and that their value can decline periodically, but not all funds will be covered by that rule. In addition, the SEC adopted rules that give funds the ability to stem investor redemptions during times of stress.
