The SEC Has Now Finalized New Transparency Regulations

The Securities and Exchange Commission (SEC) has now finalized new transparency regulations meant to shed light on the U.S money market fund industry.

“These amendments are designed to improve the resilience and transparency of money market funds.

The amendments will revise the primary rule that governs money market funds to remove the ability for a fund board to temporarily suspend redemptions if the fund’s liquidity falls below a threshold.

In addition, the amendments will remove the tie between liquidity thresholds and the potential imposition of liquidity fees.

The amendments will also require certain money market funds to implement a liquidity fee framework that will better allocate the costs of providing liquidity to redeeming investors.

In addition, the Commission is increasing the daily liquid asset and weekly liquid asset minimum requirements to 25% and 50%, respectively.”

These money market funds will be required to provide daily disclosure of the percentage of its total assets invested in weekly liquid assets (as well as daily assets) on their website to provide transparency to investors and “increase market discipling”.

And according to the filing, these rules will affect all market participants sending orders to relevant money market funds, including broker-dealers, registered investment advisers, retirement plan record-keepers and administrators, banks, other registered investment companies, and transfer agents that receive flows directly.

The rule amendments will be effective 60 days after the publication in the Federal Register.

Other Recent SEC News

Recently the U.S. Supreme Court said it will decide a new limit on the SEC’s power that may undercut the federal agencies decision-making authority.

The U.S. Supreme Court earlier this month agreed to hear a bid by President Joe Biden’s administration to defend certain Securities and Exchange Commission in-house enforcement proceedings in a case that could broadly undercut the power of federal agencies.

“The justices took up the administration’s appeal of a lower court’s decision that struck down certain SEC enforcement proceedings as unconstitutional for violating the right to a jury trial and infringing on presidential and congressional powers.

This case involves hedge fund manager George Jarkesy, who the SEC had fined and barred from the industry after determining he had committed securities fraud.”

The Supreme Court, which has a 6-3 conservative majority, has signaled skepticism toward expansive federal regulatory power, said Reuters.

Retail investors are questioning whether a limit on SEC power is the right course of action when hedge funds and market makers continue to take advantage of retail investors.

Organizations such as We The Investors have submitted more than 1,300 letters to the SEC supporting rules proposed in December that represent the biggest changes to equities trading in nearly two decades.

Retail investors have been pushing for market transparency ever since the ‘meme stock’ frenzy of 2021 but off exchange trading has only risen.

The news to limit the SEC’s power comes at the same time after Rep. Warren Davidson, R-Ohio, and House Majority Whip Tom Emmer, R-Minn have introduced the SEC Stabilization Act that would restructure the SEC and remove Chairman Gary Gensler from his post.

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