ICI Says SEC "Missed the Mark" on Money Market Fund Rule

Investment Company Institute President and CEO Eric Pan criticized the SEC's adoption of recent rule amendments aimed at preventing a run on money market funds, saying that the SEC "missed the mark" by imposing "mandatory fees along with overly strict liquidity requirements."

In a public statement, Mr. Pan argued that "there was no precedent for such a fee framework" on investors. While he applauded "the removal of the tie between minimum liquidity thresholds and fees and gates," as well as the removal of swing pricing under the final amendments to ICA Rule 2a-7 ("Money market funds") (see previous coverage), he argued that "the good work of [the SEC] is immediately undermined by the introduction of mandatory fees along with overly strict liquidity requirements." He criticized the mandatory fee for "sidelin[ing] a fund's fiduciary board of directors in favor of a one-size-fits-all solution." He argued that such a "significant new measure" should have been re-proposed by the SEC to allow for public comment and a "thorough analysis" to ensure that the regulatory process is "transparent, robust, and evidence driven."