(Bloomberg) -- U.S. securities regulators are reviewing a proposal that would require the riskiest money-market mutual funds to adopt a floating share price, according to a person familiar with the matter.
The proposal from theSecurities and Exchange Commissionwould impose the change only on the type of funds that suffered a flood of investor redemptions in September 2008, when the $62.5 billionReserve Primary Fundcollapsed, said the person, who asked not to be identified because the proposal isnt public. Money funds currently keep a stable value of $1 a share and are used as cash-equivalent accounts by individuals, institutional investors and corporations.
The riskiest funds, known as prime institutional, invest in short-term corporate debt and account for 35 percent of money-fund assets, according to the Washington-basedInvestment Company Institute, a trade group for the mutual-fund industry. A proposal to limit rule changes to institutional prime funds would be a victory for some companies, includingVanguard andCharles Schwab, that called for sparing funds that invest only in government securities from new rules.
SEC ChairmanMary Jo Whitesaid last week that the agencys goal was to mitigate the systemic risk posed by some money funds while preserving the products value to investors. She said the proposal would be issued publicly soon but declined to say when.
