On Wednesday, the US Internal Revenue Service recommended new regulations. The IRS hoped to tackle some of the tax matters the money market fund industry has raised. Most of the issues were about a possible industry reform.
The Securities and Exchange Commission suggested changes to the US$2.6 trillion money market fund industry. It was determined to lessen the risk of sudden withdrawals from the money funds.
The focus of the proposal was to make a shift from a steady price of US$1 for every share to a fluctuating net asset worth. The proposal asked for main funds utilized by the institutional investors.
The reform was said to be a direct answer to what happened in 2008. Five years ago, the Reserve Primary Fund was hurt by losses on Lehman Brothers' debt. Furthermore, it was not able to maintain its very own US$1 per share which was known as "breaking the buck." The Reserve Primary Fund was one of the biggest money funds in the world.
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