Industry recommends money-market fund safeguards

BOSTON -- An industry group is proposing stricter rules for money-market mutual funds after a fund last fall exposed investors to losses.

The Investment Company Institute on Wednesday plans to recommend money funds hold minimum levels of cash to protect the nearly $4 trillion held in the safe-harbor investments. The Associated Press on Tuesday obtained recommendations written by an ICI panel of fund company leaders.

The ICI also wants to further restrict the types of securities money funds can hold to limit risk. And the funds would have to meet a "stress test" to gauge how well each one could weather a potential run on fund assets. The industry is rejecting private insurance for money funds.