Reuters: Regulatory News: BlackRock, others in talks on money market compromise

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BlackRock, others in talks on money market compromise Oct 26th 2012, 15:46 Fri Oct 26, 2012 11:46am EDT * BlackRock's Fink: Firm has "industry supported solution" * Federated CEO says "constructive dialogue continues" By Jessica Toonkel NEW YORK, Oct 26 (Reuters) - BlackRock Inc and officials of other mutual fund operators are meeting Friday with the Securities and Exchange Commission to discuss a potential compromise on money market reform. The firms are going to meet with officials from the SEC and the U.S. Treasury Department to discuss what they see as an "industry supported solution," BlackRock Chief Executive Laurence Fink said Friday in an interview with CNBC. Spokeswomen for BlackRock and the Investment Company Institute, the trade group that represents the mutual fund industry, declined to comment. Calls to the SEC and Treasury Department were not immediately returned. News of the meeting was first reported by Bloomberg. Industry officials are meeting with regulators to reach a compromise on regulating the $2.6 trillion money market fund industry. Regulators started looking at money market funds in September 2008 after the Reserve Primary Fund, one of the largest money funds at the time, suffered losses on Lehman Brothers debt and could not maintain its $1 per share net asset value, an event known as "breaking the buck." The event ignited a run of withdrawals from investors across the industry, forcing the government to step in and back the funds. In August, the Financial Stability Oversight Council, the federal multi-agency regulator established by the Dodd-Frank reform act to oversee financial risk, took up money market reform after SEC Chairman Mary Schapiro said she did not have sufficient support to advance her reforms. Under BlackRock's proposal, money market funds, which typically have 30 percent of their holdings in assets that can be converted to cash within five days, would be frozen if liquidity fell to 7.5 percent. At that time, investors wanting to pull money out of the funds would have to pay a fee that would go back into the fund, according to a September paper published by BlackRock outlining the proposal. In its earning calls Friday, the chief executive of asset manager Federated Investors, Christopher Donahue, said "constructive dialogue continues," between companies that offer money market funds and regulators. Link this Share this Digg this Email Reprints

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