American money manager BlackRock is set to close or consolidate some money-market funds and add new features to others to in response to recent regulatory reforms, the Wall Street Journal has reported.
BlackRock in a letter to clients said that it is going to make changes to its fund lineup to comply with new rules adopted by the U.S. Securities and Exchange Commission (SEC).
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Under the new rules, certain prime money funds serving large institutional investors will be required to abandon their fixed $1 share price and float in value like other mutual funds starting from October 2016.
The new rules also allow money managers to impose temporary restrictions on withdrawals amid market stress or require a fee to redeem shares.
Following the changes, which have been introduced to prevent a repeat of the financial meltdown in 2008 that threatened to destabilize the money funds market, BlackRock’s money-market funds will be reduced from nearly 50 to over 30.
The company also plans to convert its $2.4bn TempCash fund to a new strategy that offers aspects of two existing fund types. Some other BlackRock prime funds will be converted to government funds.
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By GlobalData
