Effective lobbying by corporates and many suppliers of money market fund products and service suppliers in the US defeated the chairwoman of the Securities and Exchange Commission (SEC), Mary Schapiro, proposals to change money market funds legislation to:

• contribution by fund sponsors of prudential capital to cushion potential investor losses
• mandatory withholding of a quantum of principal on redemption for a limited period
• conversion of funds to floating NAV (VNAV).

The vote for the further regulation has been called off, BUT not abandoned. Schapiro is unwilling to let the issue rest and has called on other regulators to force reform on the industry. "The issue is too important to investors, to our economy and to taxpayers to put our head in the sand and wish it away," Ms. Schapiro said.

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Don't forget that in the USA money market funds are not actually permitted under existing federal securities statutes. Instead, they exist as a result of a special exemption granted by the SEC three decades ago. The authorities will not allow this state of affairs to continue. Expect regulation of some kind regardless of which party is in power.