Fidelity Investments, the largest U.S. provider of money-market mutual funds, is urging regulators to narrow an already scaled-back plan for making the $2.6 trillion industry safer.
A proposal offered by the U.S. Securities and Exchange Commission in June would force money funds to adopt a floating share price, not 30 percent as the SEC estimated, Boston-based Fidelity said in a comment letter filed with the agency.
Regulators, who proposed excluding retail funds from the floating share-price rule, should narrow how they define retail funds and should exclude funds that focus on municipal debt, the company said.
“The SEC grossly underestimated the industry assets that would be impacted,” the company said in the letter signed by Scott Goebel, Fidelity’s general counsel.
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The SEC’s proposals are aimed at preventing a recurrence of the run on money funds that helped freeze global credit markets in September 2008.
That panic was triggered by the closure of the $62.5 billion Reserve Primary Fund, whose shares fell below $1 on losses from debt issued by Lehman Brothers Holdings, becoming the second fund ever to break the buck.
Former SEC Chairman Mary Schapiro had sought to force all money funds to adopt a floating share price or build banklike reserves. Her plan was blocked by fellow commissioners last year.