SEC Suggests Stress Tests For money Market Funds

Four years after the $62.5 billion Reserve Primary Fund infamously “broke the buck,” i.e. the net value per share of the huge money market fund fell below $1 due primarily to the Lehman bankruptcy, regulators are still mulling ways to avoid the repetition of such events. The collapse of the Primary set off a run on other money funds, and a series of events that helped perpetuate a freeze in global credit markets. Prime money market mutual funds currently hold about $1.41 trillion worth of assets, which are generally low-risk securities against which they...