U.S. securities regulators are considering shortening a money market fund's maturity limits to protect investors after last year's sudden losses in industry pioneer Reserve Primary Fund, a source familiar with the agency's thinking said on Tuesday.

The Securities and Exchange Commission is due to meet on Wednesday to consider proposals to strengthen rules for the funds.

Money market funds were long considered as safe as cash until collapse of Lehman Brothers Holdings pushed the value of Reserve Fund below $1 a share, triggering a government program to backstop the $3.67 trillion market.

The SEC may require more disclosure about money funds' assets as well as streamlining the process by which a fund's parent company can buy its distressed assets, the source said.

The source requested anonymity because the proposal was being crafted and could change before Wednesday's meeting. Any proposal needs approval from a majority of the five SEC commissioners.

The SEC will also seek comment on whether it should consider a floating net asset value instead of the current $1 NAV, or the level the fund needs to maintain in order to pay back its customers if they want to redeem their shares, the source said.

(Reporting by Rachelle Younglai and Ross Kerber, editing by Leslie Gevirtz)

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