Driven by the 2008 financial crisis, the U.S. Security and Exchange Commission (SEC)SEC bldg has, in the last few years, implemented multiple rounds of reform regarding money market funds. 
These changes have been developed in an effort to increase fund liquidity and protect investors.
Financial institutions offering money market funds are required to implement the latest of these reforms by October 2016. The reforms involve:
- A possible imposition of a liquidity fee of up to 2% and/or a redemption gate,
(which is a temporary suspension of redemptions for up to 10 business days) - The possibility of the share price dropping below $1
The rules vary somewhat among the three newly-established categories of funds:
Retail Prime and Retail Municipal Money Market Funds
Investors deemed to be “natural persons”, certain types of trusts, participant-directed retirement accounts, etc.
- Funds are subject to a liquidity fee and/or a redemption gate.
- Accounts are eligible for the constant price of $1 per share.
(Schwab will continue to seek to maintain a constant price of $1 per share).
Institutional Prime and Institutional Municipal Money Market Funds
Corporate accounts, certain types of trusts, non-participant-directed retirement accounts
1. Funds are subject to a liquidity fee and/or a redemption gate.
2. Price fluctuates and could drop below $1 or could be priced above $1.
Government Money Market Funds
For both retail and institutional accounts
- Schwab does not plan to implement redemption fees and gates at this time.
- Accounts are eligible for the constant price of $1 per share.
Charles Schwab, the custodian of Bell Investment Advisors’ client funds, began implementing the changes required by the SEC on June 1, 2016. No action is required by Bell or by our clients. If you have any questions, please contact us at 510.433.1066 or go to:
https://www.csimfunds.com/public/csim/home/nn/money-market-fund-resource-center