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

PHILADELPHIA, Oct 10 (Reuters) - It would be much better if the Securities and Exchange Commission finally moved forward with money market reforms, instead of leaving the job to the new U.S. financial risk council, a top Federal Reserve official said on Wednesday.

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

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

"Each of the options open to the FSOC and the rest of its constituent agencies is decidedly a second-best alternative as compared to a change in SEC rules to remove the fixed net asset value exception, to require a capital buffer that would staunch or buffer runs, or measures of similar effect," Tarullo said in prepared remarks at the University of Pennsylvania Law School.

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

(Reporting by Jonathan Spicer; Editing by Diane Craft)

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