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View More Press Releases by SPARK Institute

Press release:

SPARK Institute Questions Members On Money Market Fund Reforms

Issued by: SPARK Institute

Date: Mar. 24, 2016

SIMSBURY, CT, March 23 – The SPARK Institute recently surveyed its members on their plans for implementing Money Market Fund reforms. The Securities and Exchange Commission adopted new rules on the way Money Market Funds are managed to address concerns about instability in the market during periods of financial stress. The new rules would require several changes to Non-Governmental Money Market Funds. First, Money Market Funds would be required to move to a floating NAV, rather than the current stable $1.00 per share used today. Second, during times of extreme volatility, Money Market Fund managers may impose redemption fees and withdrawal restrictions. Other changes include diversification requirements and additional reporting.

The SPARK Institute asked its members if they intend to update their defined contribution plan record keeping systems to accommodate the required changes. None of the survey respondents plan to build out the capabilities necessary to impose redemption fees or possible withdrawal gates. Instead, most record keepers are requesting their clients move to Governmental Money Market Funds. When asked how this change was being communicated to plan sponsors, most record keepers said that communication efforts have already begun and that plan sponsors are being given the option to change to a Government Money Market Fund or select a different fund by October of this year. According to one record keeper, plan sponsor reactions have been generally positive. “Most understand that converting to a Government Money Market Fund is easier for participants than trying to educate them about possible redemption fees and withdrawal restrictions during times of financial stress,” said one survey respondent.

About The SPARK Institute
The SPARK Institute represents the interests of a broad-based cross section of retirement plan service providers and investment managers, including members that are banks, mutual fund companies, insurance companies, third party administrators, trade clearing firms and benefits consultants. Through the combined expertise of its member companies, the Institute provides research, education, testimony and comments on pending legislative and regulatory issues to members of Congress and relevant Government agency officials. Collectively, its members serve approximately 85 million participants in 401(k) and other defined contribution plans.

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