What’s Next for Money Market Funds?

Do you use money market funds as a tool for cash management? Do you value the important role these funds play in our economy and financial system? If so, the time has come for you to make your voice heard in Washington.

The Securities and Exchange Commission (SEC) officially closed its public comment period on another round of regulatory reforms for money market funds on September 17, 2013. However, they still are accepting comments from those interested in letting their voice be heard.

Indeed, this latest round of proposals does include some good ideas. After all, it’s a 700-page document! But the SEC also has again proposed changes that should be very troubling for anyone who values money market funds.

One of the major options proposed by the SEC would be to force prime money market funds used by institutional investors to abandon the stable $1.00 net asset value (NAV).

This is a bad idea. Businesses, nonprofits, municipalities—these entities and others depend on money market funds offering a stable $1 share price. Forcing floating NAVs on these funds clearly would damage usefulness of these funds and, by extension, would cause problems for the people who use them.

As Commissioner Troy Paredes pointed out at the SEC’s open meeting, floating the NAV could impose “significant costs and burdens” on investors and the economy. And unlike other proposals the SEC is considering, forcing funds to float won’t even address the risk that concern regulators most—heavy redemptions in a financial crisis.

Since the SEC continues to allow comment on these proposals, it will be vital for you to express your views, including how requiring floating NAVs will affect you and your organization.

We thank you for your continued support and efforts to preserve money market funds for investors and for the economy.

Contact the SEC now. Let them know how money market funds work for you—and how regulations set in Washington should not undermine this important tool for cash management.

To make your voice heard, please click on the category below that best describes your function/interest. Chambers of commerce or other business associations should choose one of the two business categories listed.

Your comment will be submitted to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission.