Get your coffee now. Make it strong.

You’re going to want to be awake and alert when Karrie McMillan goes on stage, at the start of this first day of the ICI Mutual Funds and Investment Management Conference.

The general counsel of the Investment Company Institute appears in a mood to pull no punches about post-2008 financial regulation – and particularly moves afoot by the Securities and Exchange Commission and the Commodity Futures Trading Commission that could make life going forward tough on mutual funds, exchange-traded funds and money-market funds.

Attempts by the CFTC to “harmonize” its rules on commodities trading by mutual funds with SEC regulations she will liken to a “cruel joke’’ on thousands of equity, bond, and hybrid mutual funds.

Attempts by the SEC to firm up the financial support of money-market mutual funds will do just the opposites. She will call regulator’s proposals to either let the net asset value of those funds float from $1 a share or the impose capital requirements, with restrictions or fees on redemptions “outrageous.”

Floating the net asset value won’t reduce systemic risk. “What it will do is destroy the value of money market funds for investors,’’ she will assert.

And then there’s the Volcker Rule. Funds will not be immune from its implementation, she will say. Both mutual funds and exchange-traded funds will see liquidity drop and costs go up, as banks’ roles as market makers recede.

These are the “ three clouds that are looming over us,’’ she will tell fund executives gathered in Phoenix. “Big, threatening, dangerous clouds. Clouds that could do grave damage to funds and their investors.’’

How the implementation of the Volcker Rule should be altered, she won’t attempt to say. On the other two scores, it’s clear that she’s pushing the CFTC to put the exclusion of mutual funds from its oversight on derivatives trading back into effect. And she is challenging the SEC to drop its Round Two of money-market mutual fund reform, before it gets any further.

How will the SEC respond?

Stay alert. Here are the final words of McMillan’s triple-punch speech:

“And my next task here is certain to raise the mood in the room, because I have the great pleasure of introducing our keynote speaker—Securities and Exchange Commissioner Elisse Walter.”


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