The Institute of International Finance (IIF) submitted a response to the Securities and Exchange Commission (SEC) Request for Comment on the topic of Potential Money Market Fund (MMF) Reform Measures in President’s Working Group Report on April 12.

The IIF recognizes that the previously enacted MMF reforms in 2010 and 2014 have contributed to improving MMF liquidity and transparency, which, in turn, has strengthened the resilience and functioning of the overall short-term funding markets. However, the COVID-19 crisis has revealed some further structural vulnerabilities in short-term funding markets that should be addressed through an increased focus on market structure, as contrasted with market participants.

The letter is structured into three key areas. Firstly, the importance of further research and consideration into the specific risk factors and markets that contributed to the March 2020 market turmoil. Secondly, our view on specific policy measures, including agreement on removing the tie between MMF liquidity requirements and fee and gate thresholds. Finally, we highlight several work programs and initiatives underway globally to address short-term money markets and money market funds. We emphasize the need for SEC coordination and active engagement in global efforts to help reduce regulatory fragmentation.