ABA Urges SEC to Reform MMFs Without Focusing on Regulated Banks

In a comment letter today, ABA told the Securities and Exchange Commission that any reform of money market funds should not focus on regulated banks, which have been a source of strength during the pandemic. Throughout the COVID-19 pandemic, banks have been a reliable source of funding and liquidity for their customers, the markets and the U.S. economy, the letter said, adding that “given this source of financial strength, additional regulation for the banking sector to address concerns regarding MMFs would be inappropriate and unnecessary.”

ABA also urged the SEC to focus on making reforms within the existing regulatory structure, rather than making novel reforms that would “likely impose significant costs on the administration of prime and tax-exempt municipal funds or make them so unattractive to investors that these funds may no longer be viable.”