Charles Schwab Corp. on Friday said it doesn't plan to charge
liquidity fees or adopt redemption gates for its government funds,
following expanded regulation that allows fund managers to do so
during times of market turmoil.
"We have spent significant time reviewing the amendments and
listening to our investors' preferences," Schwab said in a
statement, adding it plans to continue offering a variety of
investment options for both retail and institutional investors.
Last July, the Securities Exchange said it would adopt expanding
regulations introduced in 2010 in response to the 2008 financial
crisis. The reforms were an attempt to limit risks of investor runs
on money market funds, and the SEC described the measures as
important both to investors who use money market funds as a cash
management vehicle and to the corporations, financial institutions
and municipalities that use them as a source of short-term
funding.
The commission said last summer that fees and gates would give
fund boards the ability to impose liquidity fees or to suspend
redemptions temporarily, if a fund's level of weekly liquid assets
falls below a certain threshold.
Specifically, fund boards would be allowed to charge redemption
fees of up to 2% once a fund's level of weekly liquid assets dips
below 10% of its total assets. A redemption gate, or suspension,
could be imposed for up to 10 days if a fund's level of weekly
liquid assets falls below 30%.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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