On June 5th, the SEC published proposed amendments to the money market fund rules. The proposal includes two alternatives, either or both of which could be adopted by a fund complex. Under the first alternative, prime institutional money market funds would be required to transact at a floating net asset value ("NAV") and be required to "basis point round" their share price to the nearest 1/100th of one percent. Government and retail money market funds would be allowed to continue using the penny rounding method of pricing and maintain a stable share price. A government money market fund would be defined as any money market fund that holds at least 80 percent of its assets in cash, government securities, or repurchase agreements collateralized with government securities. A retail money market fund would be defined as a money market fund that limits each shareholder's redemptions to no more than $1 million per business day. Under the second alternative, money market funds would continue to transact at a stable share price, but would be able to use liquidity fees and redemption gates in times of stress. If a money market fund's level of "weekly liquid assets" were to fall below 15 percent of its total assets (half the required amount), the money market fund would have to impose a 2 percent liquidity fee on all redemptions. Once a money market fund had crossed this threshold, its board of directors also would be able to impose a temporary suspension of redemptions (or "gate"). Government money market funds would be exempt from the fees and gates requirement but could voluntarily opt into this requirement. The proposal also includes new reporting and disclosure requirements, stronger diversification requirements, and enhanced stress testing. Comments should be submitted within 90 days after publication in the Federal Register, which is expected during the week of June 10. SEC Press Release.