Comments on the SEC’s proposed money market fund reforms were due April 11, so it is time to wrap up my series on the swing pricing proposal included in the reform package. In this final post, I want to consider some baffling references to “liquidity externalities that money market fund liquidity management practices may impose on market participants transacting in the same asset classes.” I cannot find an interpretation of these references that comport with my understanding of “externalities.”
Continue Reading Market Externalities and Money Market Funds

Many have found Question 28 of the SEC staff’s 2014 Money Market Fund Reform Frequently Asked Questions frustrating. The question is whether a money market fund’s board of directors can determine to impose a liquidity fee or temporarily suspend redemptions (“gate” the fund) but delay the implementation. The delay would allow the fund to notify its shareholders and their intermediaries. Delay would also provide time to “close the gate” or start charging the fee.
Continue Reading Using Money Fund Gates in a (and as a) Clutch