Money Market Reform Likely To Stir Short-Term Bond ETFs
In 2014, the Securities and Exchange Commission (SEC) legislated new guidelines concerning the function of money market funds. These rules will finally take effect in October 2016 as a response to the liquidity issues that several banks and fund companies experienced during the 2008-2009 financial crisis.
At the core of the new rulebook is a stipulation that certain institutional money market funds will now be subject to a floating net asset value (NAV). This removes the prior “stable value” of a $1.00 NAV that has been the standard for decades. During times of stress, these subjected funds can also charge redemption fees to help stem a potential outpouring of assets.
The post Money Market Reform Likely To Stir Short-Term Bond ETFs appeared first on FMD Capital Management .
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