Better SEC reforms money markets than FSOC-Fed's Tarullo

PHILADELPHIA, Oct 10 (Reuters) - It would be much better ifthe Securities and Exchange Commission finally moved forwardwith money market reforms, instead of leaving the job to the newU.S. financial risk council, a top Federal Reserve official saidon Wednesday.

Fed Governor Daniel Tarullo said it was unfortunate that theSEC, the primary regulator of the funds, has so far failed toadvance new rules for the market that since the financial crisishas been seen as posing a systemic risk.

On Aug. 22, SEC Chairman Mary Schapiro said the regulatorwould not formally put forward its money market reform proposalssince three of five commissioners opposed them. That left thenext move to the Financial Stability Oversight Council (FSOC).

"Each of the options open to the FSOC and the rest of itsconstituent agencies is decidedly a second-best alternative ascompared to a change in SEC rules to remove the fixed net assetvalue exception, to require a capital buffer that would staunchor buffer runs, or measures of similar effect," Tarullo said inprepared remarks at the University of Pennsylvania Law School.

"And, when I say second-best here, I mean to include thefunds themselves," he added.

(Reporting by Jonathan Spicer; Editing by Diane Craft)

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