REGULATION/LEGISLATION

Most firms not ready for new SEC money market rules — survey

Eighty-five percent of officials at North American asset owners and financial services firms said they have either no understanding or limited knowledge of upcoming Securities and Exchange Commission rule changes on valuing prime money market funds, said a survey from financial services software provider SimCorp.

The survey of 100 people representing asset owners, institutional and retail money managers and asset servicing firms also showed that 23% are currently able to strike multiple net asset values, which will be required under the new SEC rules effective Oct. 14, 2016. Survey respondents were responsible for overseeing or managing a total of more than $10 trillion in assets.

Also, 75% said they weren't completely prepared for the new rules, which along with floating NAVs will also allow prime money market fund boards to impose fees and gates for withdrawals under times of financial stress.

The knowledge gap among survey respondents is in large part because the new SEC rules affect a wide range of financial service functions, including risk reporting, stress testing and compliance, said Marc Mallett, vice president, product and managed services for SimCorp North America, in a telephone interview. “Because this covers a pretty broad spectrum of responsibility, it could be hard for these firms to get their hands around these changes. They will involve different parts of a financial organization.”

Mr. Mallett added that despite the high percentage of respondents indicating that they're currently unprepared for the rule changes, “I think this industry has dealt with many regulatory changes in the past and has been ready when rules have taken effect. I think they'll be ready when these do.”