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Fidelity again urges the SEC to refrain from making money market rule changes

Fidelity Investments, the Boston financial-services company perhaps best known for its mutual funds, is urging the US Securities and Exchange Commission to refrain from implementing additional rules for the regulation of money market mutual funds.

According to Fidelity, the nation’s largest manager of money market mutual funds, a rule revised in 2010 “significantly reduced the risk” across all types of money market funds and as a result, no further reform is needed at this time. And if the SEC does decide that rule changes are necessary, Fidelity added, then such changes should be “narrowly tailored.”

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Fidelity has been a vocal critic of efforts to revise the rules. Today it disclosed copies of a Jan. 24 letter that it sent to Elizabeth M. Murphy, secretary of the SEC. The letter outlines Fidelity’s arguments for not making more changes to the rules.

Following the collapse of a big money-market fund during the 2008 financial crisis, some federal regulators have been claiming that stricter rules are needed to govern money market funds.

Among proposed changes are requirements for funds to hold capital reserves against losses — there are none right now — and limits on how quickly investors can withdraw their money, an Associated Press story from November noted.

According to Fidelity, a recent SEC study of the issue shows that most types of money market funds were not subject to large, abrupt redemptions during the financial crisis.

In its letter to the SEC, Fidelity wrote: “Fidelity continues to believe that the 2010 reforms have made money market mutual funds more resilient and additional reform is not necessary. However, to the extent that regulators continue to explore additional reforms, it is critical that any new proposals be based on data and facts that are accurate and complete and that any reforms apply only to the appropriate universe of funds.”

Chris Reidy can be reached at
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