Money fund rule finalized, others to follow (IGNITES)

The SEC’s money fund rule is the latest new rule to be adopted and it comes with a key concession. One of the rule’s intentions is to prevent runs on money funds and a controversial provision that would have required swing pricing was dropped from the final version. Instead of including burdensome swing pricing for institutional prime and tax-exempt money market funds, the rule now has a mandatory liquidity fee that money funds must implement when they have redemptions greater than five percent of their assets. FrontLine’s Founder and President Amy Lynch comments that the liquidity fee is easier to operate than swing pricing. She explains that determining the liquidity fee is a simpler calculation and has the advantage of fund pricing transfer agents and fund administrators with calculation systems already in place. Ms. Lynch adds that despite dissenting opinions and some industry pushback on certain components of the rule, the overall view is that the rule in its final form is more of a win for the industry. See IGNITES (subscription required), “SEC’s Money Fund Rule Brings Relief, And New Concerns”