Money-market fund managers eyeing ways to get around new SEC rule

New York

REGULATORS' attempts to prevent another run on the US$2.7 trillion money-market fund industry is having some unintended consequences.

Some of the largest fund providers, led by Federated Investors Inc and BlackRock Inc, are considering offering private funds with a fixed US$1 share price as an alternative to institutional prime funds that were forced last year to adopt a floating price. Invesco Ltd is discussing several alternatives with clients, including letting them move money into its existing private pool, said Lu Ann Katz, who heads the firm's global liquidity business.

Abandoning the stable share price was among the key changes the US Securities and Exchange Commission introduced last year to make the biggest money funds safer. Opponents unsuccessfully argued that the change could drive large corporations to look for alternatives. If the money managers go ahead with their plans, billions of do…