From the Wall Street Journal, “5 Things Investors Should Know About New Rules on Money-Market Funds – Brace for the possibility of fluctuating share prices and temporary blocks on redemptions” by Daisy Maxey, August 9, 2016
Investors in money-market funds should prepare now for extensive new rules in mid-October that promise to fundamentally change the $2.7 trillion industry, fund managers and experts say.
Under the new rules, prime institutional money-market funds—those that invest in short-term corporate debt and cater to large investors—and institutional municipal money-market funds must allow the value of their shares to fluctuate to reflect the current market price of their underlying holdings.
Prime and retail municipal money-market funds aimed at individual investors will try to continue with a stable $1 net asset value, but they may impose redemption fees or other selling restrictions during times of crisis.
Government money-market funds for institutional or individual investors will still attempt to maintain a $1 share price after the rules are in place, and they aren’t required to impose redemption fees or suspend redemptions.
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