Oct. 07, 2022
October 7, 2022 SEC should not reconsider the proposed one-size-fits-all approach to liquidity, in recognition that minimum liquidity levels are one of many aspects of liquidity risk management. The SEC should also consider de-linking minimum liquidity levels to individual investor concentration and/or investor type concentration with a minimum floor. Second, the proposed amendments, in particular the proposed swing pricing requirement, have the potential to limit new entrants to the market due to increased transparency and trust and will lead to greater product innovation to the benefit of investors and the stability of, and the competition within, the broader MMF industry. Fund managers are expected to build an accurate profile of a MMFs shareholders and to understand an individual shareholders liquidity preferences, despite the use of omnibus accounts to mask individual shareholder activity. Many investors, due to the nature of their business and their usage of MMFs, have unpredictable cash flow needs that even the investors cannot predict and they should be required to do so. This will help to increase transparency and prevent fraud from taking place. The current daily and weekly liquid asset requirements prescribed by Rule 2a-7 are a one-size-fits-all approach that takes no direct consideration of the different levels of individual investor concentration or investor type concentration. The proposed reforms double down on this construct, which is necessary for a free and fair market.