SEC Approves Tighter Money-Fund Rules
Plan Allows Funds to Temporarily Block Withdrawals in Times of Stress
Money market funds can impose a liquidity fee on redemptions if the fund’s weekly liquidity falls below the level required by regulations.
Redemptions may also be suspended temporarily. The SEC calls them redemption “gates.”
Institutional prime money market funds are required to float the net asset value, or NAV, rather than keeping share prices fixed at $1.
Note: An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.