Ultra-short-duration bond exchange traded funds have garnered attention as an alternative to money market funds with the SEC set to implement structure changes in coming months. However, the SEC could scale down rules to exempt some investors.
The Securities and Exchange Commission is expected to broaden exemptions for mom-and-pop retail investors from requirements that certain money funds float their value, reports Andrew Ackerman for the Wall Street Journal. [Money Market Reform Debate and Short-Duration Bond ETFs]
Proponents have argued that floating money fund share prices so that they may fluctuate beyond the signature $1 share price would allow investors to be accustomed to shifting prices and reduce panic in case the shares do dip below $1.
Money market funds hold short-term debt instruments and are designed as safe investments. However, the assets came under heavy selling pressure following the collapse of Lehman Brothers. Consequently, the SEC is under pressure to enact broad structural rules to discourage investors from quickly dumping shares during times of stress.