Under the new SEC rules for money market funds that were passed in July, funds have the power to impose liquidity fees on redemptions and temporarily suspend, or gate, redemptions under periods of stress. The gates can last for up to 10 days and exit fees can be up to 2% of redeemed balances. Funds have two years to implement the new regulations.
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| The threat of gating is enough to trigger a stampede early Fraser Lundie |
The new rules are targeted at the one third of the US money market industry that invests outside the government bond markets – a total of $890 billion in size.
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