The Securities and Exchange Commission has voted unanimously to propose rules that would reform how money market funds operate in order to make them less susceptible to runs that could harm investors. The SEC began evaluating the need for money market fund reform after the Reserve Primary Fund “broke the buck” in September 2008, at the height of the financial crisis.

The SEC’s proposal includes two principal alternative reforms that may be adopted alone or in combination. One would require a floating net asset value (NAV) for prime institutional money market funds. The other alternative would allow the use of liquidity fees and redemption gates in times of stress. The proposal also includes additional diversification and disclosure measures that would apply under either alternative.