At the end of January, the SEC approved new rules relating to money market funds in response to the recent financial crisis, including the Reserve Primary Fund's breaking the buck in September 2008.
According to the SEC's release, the new rules, which are not yet final and have not been made available to the pubic, will focus on a few areas:
* Improved liquidity: the rules will have both daily and weekly liquidity requirements for the funds, with rules regarding maturities as well as restrictions from investing in illiquid securities.
*Credit quality: the rules will place restrictions on a fund's ability to purchase lower credit quality securities.
* "Know Your Investor" Procedures: The rules will require fund manager's to hold liquid securities to meet expected or foreseeable redemptions. That will require funds to identify investors "whose redemption requests may pose risks for funds."
In addition to these, the rules will cover other areas, including certain required disclosures to publish holdings to the fund's website.
The rules become effective 60 days after publication in the Federal Register. Compliance with some rules may be phased in over time.
