The International Organization of Securities Commissions has extended the consultation period for its report on ways to address the systemic risks posed by money market funds.
IOSCO said Friday that, in response to a number of requests for more time to develop detailed responses to its report, it has extended the comment period to June 29. Comments were due by May 28, but the group said it has decided to extend that deadline due to the importance of the subject.
The report, which was released in late April, provides a preliminary analysis of the possible risks that money market funds could pose to systemic stability, and proposes a range of possible policy options to address those risks.
The proposed policy options include: mandating a move to variable net asset value, or other alternatives, in an effort to lower the expectation that funds can’t suffer losses, reducing the risk of a run when a fund fails to live up to those expectations; reforms to valuation and pricing frameworks to increase price transparency; liquidity management measures to ensure that fund managers can meet redemptions; and, reforms to reduce the reliance on credit ratings and encourage the establishment of stronger internal credit risk assessment practices.
The initiative responds to a request by the Financial Stability Board that IOSCO review potential regulatory reforms for money market funds designed to mitigate their susceptibility to runs and other systemic risks.