2014.07.2405:27:13UTC+00SEC fund reform accepted by top fund providers

Three out of the five largest fund providers in the world have expressed their approval for the new rules put in place by the Securities and Exchange Commission in the US.

Vanguard Group, BlackRock Inc, and Fidelity Investments all pledged their support to the regulations adopted today that aims to ensure the safety of the$2.6 trillion industry. The new rules included forcing funds who are regular buyers of corporate debt and have institutional investors to discontinue setting share prices at $1 and giving board members the authority to lay down redemption restrictions and fees in times of crisis.

Fidelity’s head of fixed income investing Nancy Prior says that “Our initial reaction is that the SEC has struck a reasonable balance,” referring to the heated debate on safety that has surrounded the industry in the past. Vanguard echoed the sentiment saying that regulation accomplishes the task of preserving the value of the fund market to individual investors. BlackRock was in agreement and said that money market funds will remain as a valuable strategy for cash investment.

Federated Investors, however, continued to criticize the SEC claiming that the setting of floating share prices would bring “Significantly and costly daily operational burdens on money-fund users, limiting the utility of such funds as a cash management tool.”

The issue surrounding money market funds started in 2008 when the Reserve Primary Fund became the second fund to lose money. Its collapse caused a run for other money funds that froze credit markets around the world and forced the Treasury Department to backstop US money funds.