Dodd-Frank News Center

President’s Working Group Proposed Reform of Money Market Fund Regulation Would Require SEC Rulemaking and Legislation

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and CCH Derivatives Regulation Law Reporter.

A report by the President’s Working Group on Financial Markets detailing reforms for money market funds will be considered by the Financial Stability Oversight Council, with the assistance of the SEC. The Commission, which would lay an integral role in implementing the reforms, will soon solicit public comment on the proposed reforms. Some of the proposed reforms could be adopted by the SEC under its existing authorities, while others would require legislation. The reform options address the vulnerabilities of money market funds that contributed to the financial crisis in 2008. Following the crisis, the Treasury Department directed the PWG to report on options for mitigating the systemic risk associated with money market funds and reducing their susceptibility to runs.

McCreevy Vets Counterparty Clearing Facility for Credit Default Swaps

Heeding the urgent call of European Commissioner for the Internal Market Charlie McCreevy, the derivatives industry has committed to implement the clearing of credit default swaps on a European central counterparty (CCP), pending a more complete review of the whole derivatives area. The commissioner considers that clearing of credit default swaps on a CCP in the EU essential for financial stability and oversight. The International Swaps and Derivatives Association and the European Banking Federation agreed to immediately engage in a dialogue to resolve all their outstanding technical issues.

PWG Private-Sector Committees Issue Best Practices for Hedge Funds

The two private-sector committees established by the President's Working Group on Financial Markets (PWG) released their finalized sets of best practices for asset managers and hedge fund investors in an effort to increase accountability for participants in this industry.