Drew Winters, the Lucille and Raymond Pickering Chair in Finance at the Rawls College of Business, was one of three featured professors who drafted a proposal for the Center for Capital Markets Competitiveness at the United States Chamber of Commerce in Washington, D.C. on Tuesday, October 16, 2012.
Winters discussed the future of Money Market Mutual Fund (MMMF) reform at a half-day event. Winters and two other professors from the University of Kentucky drafted a proposal supported by the U.S. Chamber of Commerce questioning the need for further reforms.
The event discussed the Securities and Exchange Commission's decision to propose additional regulations to MMMF's. The event also addressed the implications of domestic and internal MMMF regulatory reform to main street businesses, state and local governments, and investors.
Money market fund regulations adopted by U.S. securities regulators in 2010 reduced risks in the $2.5 trillion industry, according to a report sponsored by the U.S. Chamber of Commerce that questions the need for further reforms.
The report, drafted by three finance and economics professors, concludes that the Securities and Exchange Commission's 2010 rules have left money market funds more liquid and better able to withstand a wave of customer withdrawals.
The report says the industry weathered the economic turmoil in Europe in 2011 despite an uptick in redemptions and did not pose any systemic risk to the marketplace.
"Given the remarkable stability of the industry in the summer of 2011 during the eurozone crisis and uncertainty about whether the U.S. would raise its debt ceiling, we question whether there is sufficient evidence to support additional reform," says the report by David Blackwell and Kenneth Troske from the University of Kentucky, and Winters of Texas Tech University.
The 2010 reforms tightened credit quality standards, shortened weighted average maturities, imposed a liquidity requirement on money market funds and increased disclosure of fund holdings.
The report is the latest effort by the Chamber of Commerce to fend off efforts by SEC Chairman Mary Schapiro and the Financial Stability Oversight Council, or FSOC, to impose another round of rules on the money market fund industry.
The chamber released the report just two days before the FSOC is slated to meet behind closed doors, where the topic of money market funds is expected to be discussed.
Read the entire article at Reuters.