WASHINGTON--BlackRock Inc. (BLK) and other asset managers plan Friday to restart discussions with U.S. regulators over tighter regulations to the $2.6 trillion money-market mutual fund industry, according to two people with knowledge of the meeting.
The meeting with top Securities & Exchange Commission officials and their staff marks an effort to head off more draconian action proposed by an elite council focused on systemic risk.
Officials from BlackRock, multiple money-fund companies and the Investment Company Institute--an industry trade group--plan to attend the meeting, these people said. BlackRock, ICI and an SEC spokesman declined comment on the meetings or couldn't be reached.
The U.S. Treasury Department, Federal Reserve and other top regulators see money-market mutual funds as an unresolved systemic risk left over from the last financial crisis, and SEC Chairman Mary Schapiro has been pushing for tighter rules on the industry. However, in late August, a majority of the five-member SEC blocked additional rules, saying they would lead to too many unintended consequences. Ms. Schapiro has asked the Financial Stability Oversight Council to intervene.
Ms. Schapiro's proposal would have required money funds either to float their share prices like other mutual funds or to post a capital "buffer" against losses on their asset holdings.
As part of the capital buffer, money funds would have had to hold back a small portion of investors' cash for 30 days when investors redeem all their shares, to reduce the incentive to flee at a first sign of trouble.
While many top money-fund firms say Ms. Schapiro's tighter rules would kill their business, BlackRock has long favored a compromise with regulators. Last month, it embraced a proposal designed to staunch investor stampedes out of money funds by imposing redemption fees in times of trouble.
Friday's meeting was first reported by Bloomberg News.
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