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Money Market Fund Reform Draft Proposal Circulated to Commissioners

A staff proposal for money market fund reform was circulated to the SEC Commissioners on June 25th, as reported by Bloomberg and Reuters.  Although not public yet, the 337-page proposal reportedly tracks the two options outlined by Schapiro at a Senate Banking Committee hearing last week: (1) forcing money market funds to float their NAV or (2) requiring a capital buffer along with imposing holdback restrictions on investor redemptions.  The proposal also contains numerous questions to be posed to the public.  The SEC Commissioners have been given 30 days to review the draft proposal, although it is not yet clear whether SEC Chairman Mary Schapiro will then call for a vote.  Three of the five SEC Commissioners will need to vote for the proposal before it can be released for public comment.