US SEC to vote on major investment decisions

The leading regulatory authority overseeing Wall Street is set to conduct a crucial vote next week to address concerns related to systemic risk in the money market fund and private asset management sectors. These sectors collectively manage trillions of dollars from investors.

The United States Securities and Exchange Commission (SEC), comprised of five members, will deliberate on a proposal introduced in 2021 aimed at strengthening the resilience of money market funds. These funds had to rely on taxpayer bailouts during the onset of the coronavirus pandemic. The proposal suggests the implementation of a “swing pricing” rule, designed to discourage impulsive withdrawals during times of financial stress. However, the proposal has faced strong objections from the industry.

In addition, the Commission, as per the recent SEC announcement, will also vote on whether to mandate greater disclosures from private asset managers. The objective is to improve the detection of potential financial risks that may accumulate within the sector. The SEC had initially planned to decide on this proposal in March but opted to delay the vote, citing the need for further refinement.

Furthermore, the SEC will evaluate the possibility of introducing new measures concerning the frequency with which broker-dealers and swap dealers calculate reserve deposit requirements. If approved, the SEC may impose a requirement for broker-dealers to calculate reserve deposit requirements on a daily basis, as opposed to the current weekly calculation.