WASHINGTON—A pair of top U.S. policy makers said Tuesday that rules to make money-market mutual funds less susceptible to runs likely need to be improved after a bout of turmoil in March that prompted the Federal Reserve to intervene.
“There’s no doubt that we need to re-examine the reforms of the last time,” Securities and Exchange Commission Chairman Jay Clayton said on a virtual panel Tuesday. He was referring to a 2014 attempt by the SEC to address the causes of an exodus from money markets that contributed to the last financial crisis.
So-called prime money-market funds are an important source of short-term financing for many U.S. companies, including banks. For investors, they often offer higher returns than savings accounts. But while the funds are considered nearly as safe as cash by market participants, they are subject to investment risk and—at least in theory—aren’t federally insured like bank accounts.