(This post has been updated for October 31st data.)
The SEC released its money market fund statistics for the end of October, giving us a comprehensive view of the impact of the reforms which took effect on October 14th. We now have government, retail and floating NAV money market funds, the later two with the potential for liquidity fees and redemption gates. The Wall Street Journal has run a number of stories about the “unintended” consequences of the reforms. The impact on the funds has been entirely consistent with the comments the SEC received on the proposed reforms–so this outcome should have been expected. By the time the dust fully settles, FSOC may have momentarily succeeded in its objective of reducing the assets of prime money market funds to a level where they cannot pose a threat to the stability of the financial system, assuming they ever did.
Continue Reading What Hath FSOC Wrought?