Mary Jo White
Mary Jo White (Photo by Diego M. Radzinschi)

The vote on the Securities and Exchange Commission’s proposed new protections for money market mutual funds, put forward a year ago, could be delayed even longer as support for the plan begins to erode, Bloomberg Businessweek reports.

Recently two of the agency’s five commissioners—Michael Piwowar, a Republican, and Kara Stein, a Democrat—have voiced various objections to parts of the proposal, which could push back the intended late-July vote.

According to Bloomberg Businessweek, the SEC has been under increasing pressure from the Federal Reserve and other American and global regulators to make money funds less vulnerable to investor runs. Money funds currently manage more than $2 trillion in individual and institutional savings.

Bloomberg Businessweek explains that money funds, while considered a safe and stable place to keep money, are not insured deposits and are vulnerable to runs. The Financial Stability Oversight Council—a regulatory body formed as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act—has pushed the SEC to complete a rule, arguing that shareholders are motivated to pull out if a fund’s share price drops below $1.

Last year the SEC voted unanimously for a proposal that only the money funds that invest in corporate debt—considered the most risky—make their share prices float. The proposal stated that shares would be priced to the fourth decimal place, and that the floating value would only be imposed on funds catering to institutional investors, Bloomberg Businessweek reports. The SEC also simultaneously put forward another option, which would allow a money fund’s board to restrict redemptions at times of market stress.

In a speech last week, Stein questioned whether redemption limits would exacerbate the risk of investor runs by causing “pre-emptive” redemptions ahead of the implementation of the measures. Piwowar is concerned that pairing redemption limits with floating share prices could make money funds unattractive to investors, the Wall Street Journal reports.

Commissioner Daniel Gallagher, meanwhile, has voiced his support for the agency’s proposal, and both Commissioner Luis Aguilar and SEC Chair Mary Jo White voted for the proposal last year. If all three continue to support the final rule, it could pass with just three votes, Bloomberg Businessweek reports.