WASHINGTON (Reuters) – Senator Pat Toomey is urging businesses to push back against efforts by U.S. securities regulators to impose new rules on the money market fund industry, which he says could "wipe out" the products.

Speaking to an audience at the U.S. Chamber of Commerce on Wednesday, he expressed frustration that the U.S. Securities and Exchange Commission is trying to move ahead on sweeping money market fund reforms.

"I think that money market funds are under attack. I think there is a concerted effort to impose very, very, very troublesome regulations that in some cases I think do threaten the viability of the product itself," said Toomey, a Pennsylvania Republican and member of the Senate Banking Committee.

"I think we should push back very aggressively."

Toomey said he would consider introducing legislation pushing back on the reforms, if necessary.

The $2.6 trillion money market fund industry came under scrutiny during the financial crisis after a run on the Reserve Primary Fund caused it to "break the buck" when its net asset value fell below the $1-per-share mark.

The SEC moved to shore up the industry with new regulations in 2010, including tightening credit quality standards, shortening the maturities of fund investments and imposing a new liquidity requirement.

But SEC Chairman Mary Schapiro and banking regulators have said those are not enough. Staff at the SEC last month circulated two early draft plans for either a capital buffer coupled with a holdback on redemptions or a floating fund valuation.

The two competing plans have met with some resistance internally from three SEC commissioners, and they have also prompted a major backlash from money market fund industry players and U.S. businesses that rely on the funds for their short-term funding needs.

Critics say the recent regulations adopted in 2010 have worked well so far, and that money market funds have since weathered some major storms such as the European debt crisis.

They also fear redemption holdbacks, capital buffers or other changes could drive investors out of money market funds into bank accounts.

There have also been warnings that the reforms intended to reduce risk could unintentionally do the opposite by stoking another round of consolidation in the industry.

On Tuesday, the U.S. Chamber and a group of corporate treasurers took to Capitol Hill to meet with lawmakers to discuss their concerns about the money market fund proposals. Later on Wednesday, they are expected to head to meetings with U.S. regulators.

Toomey said if the SEC proceeds with some of the reforms in the works, he will call for congressional hearings to "give as much public scrutiny to this as possible."

(Reporting By Sarah N. Lynch, editing by Dave Zimmerman)

NEW YORK (Reuters) – Stocks closed flat in another thinly traded session on Wednesday as Greece remained in a standstill over accepting tough reforms in exchange for a bailout critical to avoiding a chaotic default.

Underlying confidence kept the Dow near an almost four-year high notched on Tuesday, though trading has been quiet since last week's stellar employment report. The S&P and Nasdaq are both up 0.3 percent so far this week while the Dow is essentially unchanged.

Randy Frederick, director of trading for Charles Schwab in Austin, Texas, said he would use any pullback on Greece as a buying opportunity. "And if the situation there gets resolved, we'll move higher even faster."

Greek party leaders gathered on Wednesday to agree to reforms demanded by the European Union and the International Monetary Fund after delays.

European Central Bank policymakers were still divided on what contribution the bank could make to a restructuring of Greece's sovereign debt, sources said. The ECB has ruled out joining private creditors in voluntarily accepting a reduction in the value of the Greek bonds it holds.

"We would take a hit if Greece is unable to come to a deal, but lately we've been decoupling from Europe as markets catch up to how strong the economy appears to be," said Frederick.

Dow component Walt Disney Co rose 0.7 percent to $41.27 a day after it reported quarterly profit that topped expectations.

Of the 315 companies in the S&P 500 that have reported earnings to date, 61 percent have come in above analysts' expectations, a rate below that of previous quarters.

Cisco Systems Inc, another Dow component and a bellwether for the networking industry, rose 2.4 percent to $20.93 in extended trading after reporting adjusted second-quarter earnings that beat expectations. Shares of Groupon Inc, the largest daily deal company, plunged 7.6 percent to $22.70 after the bell after it unexpectedly posted an adjusted quarterly loss, even as revenue almost tripled from the prior year.

The Dow Jones industrial average was up 5.75 points, or 0.04 percent, at 12,883.95. The Standard & Poor's 500 Index was up 2.91 points, or 0.22 percent, at 1,349.96. The Nasdaq Composite Index was up 11.78 points, or 0.41 percent, at 2,915.86.

The Dow on Tuesday marked its highest close since May 2008; stocks have rallied from late last year on central bank action and signs of an improving economy.

On Wednesday, high-profile Wall Streeters raised eyebrows with their endorsement of stocks.

Laurence D. Fink, chief executive of BlackRock, the world's largest money manager, told Bloomberg Television that investors should be 100 percent in stocks.

That followed bullish comments from the staff of renowned market bear Nouriel Roubini. Gina Sanchez, Roubini's director of equity and allocation strategy, told CNBC that the rally "has some legs."

The Dow has gained 21 percent since early October and has retraced over 80 percent of its bear market slide from 2007 to early 2009. The blue-chip index is now about 10 percent away from the all-time high it hit in October 2007, while the S&P and Nasdaq are both on track for a sixth week of gains.

The speed and magnitude of the gains have some suggesting a pullback could be imminent. While major indexes are slightly higher for the week, the CBOE Volatility index, which is considered a gauge of investor fear and generally moves inversely to the S&P, has spiked 6.3 percent.

Polo Ralph Lauren Corp surged 9.2 percent to $171.49 after the clothing maker reported better-than-expected results for the holiday quarter and raised its margin forecast.

Energy shares were the biggest decliners, as Brent and U.S. crude oil futures pared gains after a report showed a build-up in U.S. crude inventories. The S&P energy index fell 0.5 percent. Exxon Mobil Corp was one of the biggest losers on the Dow, falling 0.6 percent to $85.32.

Volume was light, with about 6.97 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.

About 56 percent of stocks traded on the New York Stock Exchanged closed in positive territory while 54 percent of the Nasdaq closed higher.

(Reporting By Ryan Vlastelica; Editing by Leslie Adler)

NEW YORK (Reuters) – Stocks fluctuated around break-even on Wednesday as investors waited for Greece to accept tough reforms in exchange for a new bailout, but underlying confidence kept the Dow near its almost four-year high notched on Tuesday.

Greek party leaders finally gathered on Wednesday to agree to reforms demanded by the European Union and International Monetary Fund after delays that seemed to have been caused by procedural matters.

European Central Bank policymakers were still divided on what contribution the bank could make to a restructuring of Greece's sovereign debt, sources said. The ECB has ruled out joining private creditors in voluntarily accepting a reduction in the value of the Greek bonds it holds, but could come up with an alternative method.

"It is going to be a drawn-out process like it has been, but the market has been looking beyond that," said Tim Ghriskey, investment officer of Solaris Asset Management in Bedford Hills, New York.

The Dow Jones industrial average dropped 17.33 points, or 0.13 percent, to 12,860.87. The Standard & Poor's 500 Index fell 0.37 points, or 0.03 percent, to 1,346.68. The Nasdaq Composite Index gained 1.82 points, or 0.06 percent, to 2,905.90.

Energy shares were the biggest decliners, as Brent and U.S. crude oil futures pared gains after a report showed a build-up in U.S. crude inventories. The S&P energy index fell 0.7 percent. Exxon Mobil Corp was the biggest drag on the Dow, falling 1.2 percent to $84.87.

The Dow closed Tuesday at its highest level since May 2008 as stocks rallied from late last year on central bank action and signs of an improving economy.

The Dow has gained 21 percent since early October and has retraced over 80 percent of its bear market slide from 2007 to early 2009. The blue-chip index is now about 10 percent away from the all-time high it hit in October 2007.

"New highs bode well for future performance," technical analysts at Instinet in New York said in a research note. "From an intermediate perspective a new high would be a positive for the index."

High-profile Wall Streeters raised eyebrows with their endorsement of stocks.

Laurence D. Fink, chief executive of BlackRock, the world's largest money manager, told Bloomberg Television that investors should be 100 percent in stocks.

That followed bullish comments from the staff of renowned market bear Nouriel Roubini. Gina Sanchez, Roubini's director of equity and allocation strategy, told CNBC that the rally "has some legs."

"Any day when you a number of pundits come out and say you should own stocks, a lot of people say 'Oh, time to sell', especially after the market's had a big move," said Ghriskey.

Walt Disney Co rose nearly 1 percent to $41.32 and was a top boost to the Dow a day after it reported quarterly profit that grew more than expected.

Polo Ralph Lauren Corp surged nearly 9 percent to $171.14 after the clothing maker reported better-than-expected results for the holiday quarter and raised its margin forecast.

Ingersoll-Rand Plc, the maker of Schlage locks and Trane air conditioners, climbed 2 percent to $38.30 after quarterly results topped estimates, although sales fell.

Of the 315 companies in the S&P 500 that have reported earnings to date, 61.0 percent have come in above analysts' expectations.

McDonald's Corp shed 0.7 percent to $100.24 after its January sales rose more than expected at established restaurants across the globe, with strength in the United States helping to offset slowing sales growth in Europe.

Rambus Inc advanced 9 percent to $8.23 after the company reached a patent license agreement with Nvidia Corp and the companies settled all outstanding claims. Nvidia shares rose 4.1 percent to $16.38.

(Reporting By Edward Krudy; Editing by Leslie Adler)

NEW YORK (Reuters) – Stocks were set for a slightly higher open on Wednesday on optimism that the latest attempt by Greece to reach a deal on reforms in exchange for a new bailout would be successful.

The recent delays stirred European Union officials to warn Greece that the euro zone could continue without the fiscally troubled nation, which needs a rescue package to avoid an unruly default.

"They are pretty close on the debt talks, and it looks like the prime minister is getting the various members of his coalition in line (so) that they may actually get this done," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"These folks have been at it for a very long time. They have been fighting with this issue for about eighteen months, so they really do see this as, 'We have to get it right this time.'"

In Europe, shares hit a new six-month high with cyclical stocks extending a strong run as investors became more confident that economic growth would boost company earnings and overshadow Greece concerns. The FTSEurofirst 300 index of top European shares was up 0.3 percent.

Yields on Spanish and Italian government bonds fell on the belief a Greek deal could be consummated.

S&P 500 futures were flat and slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 21 points, and Nasdaq 100 futures added 2.25 points.

Walt Disney Co's quarterly revenue fell short of expectations after a poor showing from the movies unit, but it said late Tuesday profit grew faster than expected as its TV networks and theme parks held strong despite the weak economy. Shares fell 0.6 percent to $40.75 in premarket trade.

Time Warner Inc gained 2.9 percent to $39.20 after reporting better-than-expected quarterly profit, helped by its cable networks and the last installment of its Harry Potter movie franchise.

Ingersoll-Rand Plc rose 0.7 percent to $37.83 premarket after quarterly results topped expectations, although sales fell.

McDonald's Corp added 0.4 percent to $101.34 after January sales rose more than expected at its established restaurants across the globe.

Visa Inc, due later Wednesday, is expected to come in with a profit of $1.45 per share, up from $1.23 a year ago, helped by a rise in consumer spending in the holiday season.

Other companies due to report include Cisco Systems Inc and News Corp.

Cisco is expected to post a stable quarter, lifted by improving U.S. enterprise demand a year after the network equipment maker issued a weak outlook.

Investors will also eye Groupon Inc, coming with its first results as a public company, to see if the largest daily deal website makes its first quarterly profit. Groupon is expected to report earnings of 3 cents per share on revenue of $475 million, according to Thomson Reuters I/B/E/S.

According to Thomson Reuters data through Tuesday morning, of the 301 companies in the S&P 500 posting results, 60 percent topped expectations, tracking below recent quarters at this point of the reporting season.

Rambus Inc jumped 9.3 percent to $8.25 premarket after the company reached a patent license agreement with Nvidia Corp and the companies settled all outstanding claims. Nvidia shares rose 0.4 percent to $15.81.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)

NEW YORK (Reuters) – Stock index futures pointed to a slightly higher open for equities on Wall Street on Wednesday, with futures for the S&P 500, the Dow Jones and the Nasdaq 100 rising 0.2 to 0.3 percent.

Walt Disney Co's quarterly revenue fell short of Wall Street's expectations after the movie studio put in a poor showing, but profit grew at a faster-than-expected 12 percent clip as media networks and theme parks held up in an uncertain economy.

Western Union, the world's largest payment transfer company, posted a higher fourth-quarter profit, but forecast full-year earnings below market expectations on macro-economic challenges.

Groupon reports its first results as a public company and the market will be keen to see if the largest daily deal website makes its first quarterly profit. Groupon is expected to report earnings of 3 cents per share on revenue of $475 million, according to Thomson Reuters I/B/E/S.

Visa is expected to post a profit of $1.45 per share, up from $1.23 per share in the quarter, helped by a rise in consumer spending in the holiday season.

Other companies announcing results include Sprint Nextel, Cisco Systems, News Corp, Moody's Corp and Time Warner.

The Mortgage Bankers Association releases at 1200 GMT Weekly Mortgage Market Index for the week ended February 3, versus the prior week. The mortgage market index read 753.3 and the refinancing index was 4,113.8 in the previous week.

Yahoo Inc Chairman Roy Bostock and three other directors will step down as the struggling company ploughs ahead with an internal overhaul, including discussions on dealing with its stakes in China's Alibaba Group and Yahoo Japan.

Real estate services company CBRE Group Inc's quarterly earnings, excluding charges, beat Wall Street's forecast, as stronger revenue from sales and its outsourcing business offset lower leasing revenue from the Americas.

Lower chicken wing costs and price increases helped bar and grill chain Buffalo Wild Wings Inc top Wall Street estimates and forecast strong growth in fourth-quarter same-store sales.

Oil field services company Halliburton plans to stop issuing BlackBerry smartphones to employees and switch over to Apple's iPhone, which it said was better suited to its needs, marking another setback for Research In Motion.

Illumina rejected as inadequate on Tuesday a $5.7 billion hostile takeover bid from Roche, saying it undervalues the gene sequencing company.

Life Technologies Corp, a maker of tools and genetic testing equipment used in biotechnology research, on Tuesday reported slightly higher than expected fourth-quarter profit and said it sees modest revenue growth in 2012.

European stocks rose 0.6 percent on Wednesday, breaking a two-day losing streak, thanks to a string of upbeat corporate outlooks and as investors bet that Greece will finally secure the bailout it needs to avoid a chaotic default.

Greek parties will try yet again on Wednesday to strike a reform deal in return for a new international rescue package to avoid a chaotic default, after a string of delays which have prompted some EU leaders to warn that the euro zone can live without Athens.

U.S. stocks rose slightly on Tuesday, but with the outcome of discussions on a bailout package for Greece uncertain, investors are unlikely to make big bets in coming days.

The Dow Jones industrial average was up 33.07 points, or 0.26 percent, at 12,878.20. The Standard & Poor's 500 Index was up 2.72 points, or 0.20 percent, at 1,347.05. The Nasdaq Composite Index was up 2.09 points, or 0.07 percent, at 2,904.08.

(Reporting by Blaise Robinson. Editing by Jane Merriman)

WASHINGTON (Reuters) – Congress made a mistake when it stripped away most of the Securities and Exchange Commission's authority to police the holding companies of broker-dealers for risks, according to the SEC's newest commissioner.

In his first formal interview with Reuters since joining the SEC late last year, Commissioner Daniel Gallagher defended the purpose behind the now-defunct oversight regime, which gave the SEC a direct window into the holding company operations of investment banks.

That program, which regulated Supervised Investment Bank Holding Companies (SIBHC) under 17(i) of the Exchange Act, was separate from the Consolidated Supervised Entities (CSE) program, which allowed the SEC to voluntarily monitor five major investment banks for capital and liquidity levels.

The CSE program was shut down by the SEC in 2008 amid criticism that it failed to properly oversee Bear Stearns.

Congress then later stripped the SEC of its authority under 17(i) to oversee supervised investment bank holding companies in the 2010 Dodd-Frank law and gave the power instead to the Federal Reserve.

Now, the SEC only has some outdated rules on the books that give it an opaque window into the holding companies of broker-dealers.

"As we see it now, … we are out of the holding company oversight regime," Gallagher said last week in the interview.

Gallagher said Congress should have actually expanded the SEC's authority in this space.

"Where we might have netted better tools out of Dodd-Frank, they actually eliminated that program and ceded all of that power to the Fed … I think that was a mistake," he said

Gallagher, a Republican who was nominated to the SEC by President Barack Obama last year, has insight into the CSE program and broker-dealer oversight in general.

Prior to becoming a commissioner at the SEC, he worked in management positions within the SEC's Trading and Markets Division during the height of the financial crisis and helped oversee the CSE program.

Most recently, he worked as a partner at the law firm Wilmer Cutler Pickering Hale.

Although the CSE and SIBHC programs are gone, Gallagher said there is still at least one remaining tool that the SEC can use to police the holding companies of broker-dealers: a series of antiquated risk assessment rules on the books known as 17h.

Those rules, which are still only temporary despite becoming effective in 1992, require broker-dealers that are part of a holding company with at least $20 million in capital to file certain information about the holding company and its other various subsidiaries.

A 2008 audit by the SEC's then-inspector general, David Kotz, was critical of the agency for failing to update and finalize the 17h risk assessment rules. The report also found that the SEC was not diligent in enforcing the rules' document retention and filing requirements.

As a new commissioner, Gallagher said one of his priorities will be to encourage the commission to better utilize these rules to help improve the SEC's core mission of overseeing broker-dealers, especially when there are no other regulators minding the shop.

"It is very narrowly prescribed, but it is a useful tool and it helps us to understand these entities better," said Gallagher of the risk assessment rules.

"The largest investment bank will have multiple layers of regulators at this point, but if you get into a pure broker-dealer holding company … and you don't have a bank involved, … we might be it. "

(Reporting By Sarah N. Lynch; Editing by Steve Orlofsky)

This story update corrects paragraphs 2-7 and paragraph 12 to clarify the differences between the CSE program and the Supervised Investment Bank Holding Company program under 17(i)

NEW YORK (Reuters) – Stocks rose slightly on Tuesday, but with the outcome of discussions on a bailout package for Greece uncertain, investors are unlikely to make big bets in coming days.

The S&P has gained almost 7 percent in 2012 on better-than-expected economic figures, boosting bellwethers such as Microsoft Corp (MSFT.O) to yearly highs and Apple Inc (AAPL.O) to a record high.

In a sign of underlying confidence, the 10-day moving average of stocks posting 52-week highs on the NYSE is at 203, the highest level since May 2010, according to Thomson Reuters Datastream. The 10-day moving average of stocks hitting 52-week lows has dropped to just eight.

Still, the market continues to watch the euro zone for any sign of a setback in resolving the sovereign debt crisis.

"There's a tug of war between fundamentals, which are improving, and the macro backdrop of geopolitical risk from Europe," said Andrew Goldberg, market strategist at J.P. Morgan Funds in New York. "We're still waiting on Greece, but at the same time we're almost being forced to pay attention to the improving data."

Greece's government is preparing a document with a list of painful reforms needed to clinch a new, 130-billion-euro bailout

financing package that is critical to the country avoiding a disorderly default. Political parties on Tuesday again delayed making a decision on accepting the reforms.

A disorderly Greek debt default would almost certainly lead to increased fiscal problems for weaker members of the euro zone and would risk wreaking havoc in credit markets. The impact could also dampen the U.S. recovery.

Boosting the Dow, Coca-Cola Co (KO.N) rose 0.8 percent to $68.55 after it reported better-than-expected quarterly results and announced a cost-savings program.

Fellow Dow component Microsoft climbed 0.5 percent to $30.35 while Apple rose 1.1 percent to $468.83.

The Dow Jones industrial average (.DJI) was up 33.07 points, or 0.26 percent, at 12,878.20. The Standard & Poor's 500 Index (.SPX) was up 2.72 points, or 0.20 percent, at 1,347.05. The Nasdaq Composite Index (.IXIC) was up 2.09 points, or 0.07 percent, at 2,904.08.

The benchmark S&P 500 index last week marked a fifth straight week of gains on the back of improving U.S. economic data, capped by Friday's payrolls report. Accommodative monetary policy around the world has also helped to fuel the rally.

Technical analysts say that improved medium-term momentum indicators such as a recent move of the S&P 500's 50-day moving average above its 200-day moving average should mean more gains for stocks in the coming months.

Shares of money-market fund operators took a hit on Tuesday after The Wall Street Journal reported that the U.S. Securities and Exchange Commission was finalizing rules meant to stabilize the $2.7 trillion money-market mutual fund sector, including allowing the net asset value of funds to fluctuate.

Shares of Federated Investors Inc (FII.N), whose high percentage of money-market funds makes it vulnerable to changes in fund rules, fell 3.3 percent to $18.03.

Shares in Charles Schwab Corp (SCHW.N), another large money-fund provider, fell 2.8 percent to $12.34 on heavy volume.

Walt Disney Co (DIS.N) fell 1.3 percent to $40.46 in extended trading after it reported weaker-than-expected revenue for its fiscal first quarter.

Emerson Electric Co (EMR.N) dipped 2.7 percent to $51.92 after it reported lower quarterly sales and earnings as last year's floods in Thailand disrupted supply chains and weak European economies hurt demand.

According to Thomson Reuters data through Tuesday morning, of the 301 companies in the S&P 500 posting results so far, 60 percent topped expectations, tracking below recent quarters at this point of the reporting season.

"Earnings are certainly weaker than prior quarters, especially for companies with overseas exposure, but at the same time that's something that isn't unexpected when you consider the headwinds," Goldberg said.

Swiss bank UBS (UBSN.VX) (UBS.N) predicted more weakness in investment banking after a restructuring of the business failed to prevent an earnings hit from the euro-zone debt crisis and worries about the global economy. UBS shares dipped 0.7 percent to $14.27 in New York trade.

Federal Reserve Chairman Ben Bernanke on Tuesday renewed a pledge to prevent Europe's financial crisis from damaging the U.S. economy in testimony before Congress that mirrored remarks he made last week.

About 54 percent of stocks traded on the New York Stock Exchange ended in positive territory while on the Nasdaq slightly more stocks fell than rose. Volume was light, with about 6.48 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.

(Editing by Leslie Adler)

(Reuters) – The chairman of the Securities and Exchange Commission is eyeing two potential plans to bolster the stability of money market funds, but their fate remains uncertain due to internal disagreement at the SEC over the need for more regulations.

Last month, agency staff circulated early drafts for either a capital buffer or a floating fund valuation, both aimed at preventing runs on money market funds and investor losses in the $2.6 trillion industry, people familiar with the matter said.

Regulators began to focus on new rules for the money market fund industry after the Reserve Primary Fund "broke the buck" in 2008, at the height of the financial crisis, when its net asset value below the $1 mark.

In 2010, the SEC adopted a series of new rules in response to that event, including tightening credit quality standards, shortening the maturities of fund investments and imposing a new liquidity requirement.

The industry and several SEC commissioners have questioned whether any further changes are required.

One of the new plans, favored by some SEC staff and banking regulators, would consist of both a capital buffer requirement and a 30-day hold-back on redemption requests by investors.

Under that proposal, funds would need to maintain a 1 percent capital cushion and they would hold back 3 percent of investor funds for 30 days after a redemption request.

The alternative plan calls for a floating net asset value to help curb investor complacency over the stable $1-per-share value that funds currently quote.

The concepts were first discussed by SEC Chairman Mary Schapiro in a major speech to the brokerage industry last November.

The Wall Street Journal reported on Tuesday that the SEC would unveil the plans in the coming weeks.

SEC staff are hoping to put both plans out for public comment, but would anticipate only adopting one of the two proposals, people with knowledge of the matter told Reuters. The goal is to unveil them sometime in the spring.

Schapiro, the Federal Reserve and other members of the Financial Stability Oversight Council, have argued that more changes are needed to prevent a run on money market funds.

"The Chairman has long called for reform of money market funds to avoid the destabilizing events that occurred following the breaking of the buck of the Reserve Primary Fund in 2008," SEC spokesman John Nester said on Tuesday.

"As a first step of reform, the SEC adopted meaningful measures to increase the resiliency of money market funds by shortening their maturities and enhancing their liquidity. As a second step, the Chairman is advocating structural reforms to money market funds to address their susceptibility to runs and provide a buffer against losses," Nester said.

To put these latest proposed reforms out for comment, the SEC needs approval from at least three of the five commissioners.

But three commissioners have expressed some doubts about the need for more reforms, with at least some of them unlikely to even agree to propose a rule, let alone vote to implement one, one person familiar with their thinking said.

Part of their concern stems from the fact that the SEC already acted to put new rules on the books in 2010 and that the latest proposals might harm the industry.

"As far as I know, these issues were fully vetted in 2010," said Dan Gallagher, the SEC's newest commissioner, in an interview with Reuters last week. "There has to be data that shows the need to act in this space or data that shows that you don't. But I just haven't seen that yet."

Money market fund executives have said the proposals could drive investors out of money funds and into bank accounts and reduce a key source of credit for U.S. businesses.

Fidelity Investments has warned regulators that more than half of its money-fund clients would move some or all of their assets out of the investments if the net asset value of the funds were allowed to fluctuate.

The U.S. Chamber of Commerce is due to host a discussion on money market reforms on Wednesday.

(Reporting by Sarah N. Lynch; Editing by Tim Dobbyn)

NEW YORK (Reuters) – U.S. stocks traded edged higher on Tuesday as investors awaited the outcome of discussions on a bailout package for Greece that would help the country avoid a chaotic default.

Greek officials worked on the draft of a text on the 130-billion-euro bailout plan that will be put to political leaders for approval as strikers protesting against more austerity tussled with police outside parliament.

A light U.S. economic calendar this week shifted investor focus back to the euro zone. With the S&P 500 up 6.6 percent this year the market has grown cautious before Greek leaders put pen to paper on the terms of the deal.

Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut, said the market was holding up well despite some profit taking as investors bet a deal would be completed.

"If investors thought the Greek talks were going to collapse, financial markets will be a lot weaker than they are," he said. But "a lasting solution continues to be something that is hard to come by."

Cyclical areas of the market that led the recent rally were the weakest on Tuesday. The S&P energy (.GSPE) and industrial (.GSPI) indexes fell 0.8 percent. Boeing Co (BA.N) was the biggest drag on the Dow industrials, dropping 1.3 percent to $74.46.

A disorderly Greek debt default would almost certainly lead to increased fiscal problems for weaker members of the euro zone and risks wreaking havoc in credit markets. The impact could also dampen the U.S. recovery.

The Dow Jones industrial average (.DJI) was up 28.42 points, or 0.22 percent, at 12,873.55. The Standard & Poor's 500 Index (.SPX) was up 1.29 points, or 0.10 percent, at 1,345.62. The Nasdaq Composite Index (.IXIC) was up 4.99 points, or 0.17 percent, at 2,906.98.

"On the equities side, we've come a long way, and we are getting into overbought territory, so most of us are expecting a bit of a pullback or a period of consolidation," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "The depth of the pullback really depends on Greece and the European debt problems."

The benchmark S&P 500 index had risen for five straight weeks on the back of improving U.S. economic data, capped by the Friday payrolls report. Accommodative monetary policy around the world has also helped to fuel the rally.

Coca-Cola Co (KO.N) rose 1.5 percent to $69.05 after the soft-drink maker reported better-than-expected quarterly results and announced a new cost-savings program.

As earnings season winds down, investors awaited results from companies including Lincoln National Corp (LNC.N) and Walt Disney Co (DIS.N).

According to Thomson Reuters data through Tuesday morning, of the 301 companies in the S&P 500 posting results, 60 percent topped expectations, tracking below recent quarters at this point of the reporting season.

Emerson Electric Co (EMR.N) dipped 2.9 percent to $51.76 after it reported lower quarterly sales and earnings as last year's floods in Thailand disrupted supply chains and weak European economies hurt demand.

In a troubling sign for the banking sector, UBS predicted more weakness in investment banking after a restructuring of the business failed to prevent an earnings hit from the euro-zone debt crisis and worries about the global economy. Shares dipped 1.7 percent to $14.12 in New York trade.

ArcelorMittal (MT.N)(ISPA.AS) forecast improvement in the first half of 2012 after a weak end to last year, with a clear pick-up in North America but continued concerns about Europe. U.S.-listed shares of the world's largest steelmaker rose 1.6 percent to $21.83.

European shares fell on the Greece talks and after disappointing results from investment bank UBS AG (UBSN.VX)(UBS.N) and engineering firm Alfa Laval AB (ALFA.ST). The FTSEurofirst 300 (.FTEU3) index of top European shares fell 0.3 percent. (.EU)

Federal Reserve Chairman Ben Bernanke on Tuesday renewed a pledge to prevent Europe's financial crisis from damaging the U.S. economy in testimony before Congress that mirrored remarks he made last week.

(Editing by Padraic Cassidy)

(This story corrects seventh and seventeenth paragraph to show Alfa Laval is an engineering firm and not a shipbuilder)

BOSTON (Reuters) – Fidelity Investments, the largest money-market fund manager, recently warned U.S. regulators that more than half of its money fund clients would move all or some of their assets out of the investments if the net asset value of the funds was allowed to fluctuate.

The warning comes as the U.S. Securities and Exchange Commission weighs controversial proposals to add more regulation to the $2.7 trillion money-market fund industry. SEC Commissioner Mary Schapiro has been pushing for more reserves and to do away with the money funds' fixed $1 net asset value.

The industry vehemently opposes more regulation.

On Tuesday, the Wall Street Journal reported that Federated Investors Inc. (FII.N) Chief Executive Christopher Donahue plans to sue the SEC if the new regulations interfere with his firms' ability to do business. Federated manages about $256 billion of money-market fund assets.

Meanwhile, in a February 3 letter to the SEC, Fidelity General Counsel Scott Goebel shared the Boston-based company's research on how investors might react to potential reforms. Fidelity had $433 billion in money-market fund assets under management at the end of 2011, representing 10.9 million accounts among retail and institutional investors.

Reforms being considered by the SEC "could spark retail and institutional investors to pull significant amounts of assets out of money-market mutual funds, leading to unintended consequences for the financial markets and U.S. economy," Fidelity said.

Nearly 60 percent of institutional investors surveyed by Fidelity said they would move all or some of their assets out of money funds if the net asset value was allowed to fluctuate. And 47 percent of retail investors said they would do the same.

Fidelity also surveyed how investors may react to liquidity restrictions, such as implementing a holdback feature to make money-market funds less susceptible to runs during a time of market stress.

Fidelity said it tested versions of a holdback feature, and said 52 percent of retail investors surveyed would invest less, or stop investing altogether, in money market funds if a 3 percent holdback feature was instituted on redemption. Results did not change significantly when the holdback was dropped to 1 percent, Fidelity said.

For example, if an investor redeemed $1,000 from a money- market fund, 1 percent — or $10 — would be held back and delivered after a waiting period of 30 days, according to one potential scenario presented in Fidelity's survey.

Fidelity and other money market managers oppose more regulations, especially since reforms in 2010 required the industry to hold more liquid and shorter duration investments.

Fidelity also said it tested the idea of a 1 percent non-refundable redemption fee that is triggered if a fund's share price dipped below $.9975. Of the retail money-market fund clients surveyed, 70 percent said they would invest less, or stop investing altogether, if they were subjected to that sort of redemption fee.

"Given the importance retail investors place on the liquidity feature of money-market mutual funds, it is not surprising that investors reacted so negatively to a potential rule that would restrict access to principal," Fidelity said in its report.

(Reporting By Tim McLaughlin; Editing by Maureen Bavdek)