In a comment letter to U.S. Securities and Exchange Commission
Chairman Mary Schapiro sent April 4, the Association for Financial
Professionals said it opposed eliminating the stable net asset
value (NAV) in favor of a floating NAV. Although the SEC has yet to
issue a formal proposal, Schapiro has said that the agency is
considering the floating NAV as one way to reform money market
funds (MMFs). AFP's preemptive comment is an indication of its
membership's strong opposition to the concept.
Switching from a stable to a floating NAV "would greatly reduce
investors' interest in utilizing MMFs as a cash management and
investment tool, whether applied to all investors or just
institutional investors," the AFP letter states. "Should regulators
eliminate the stable NAV on MMFs, some corporate investors will be
forced to walk away due to mandatory investment guidelines that
require a stable per-share value. The resulting reduction in MMF
balances would reduce the capital available to purchase commercial
paper, making short-term financing for these businesses less
efficient and more costly."
Read the full AFP comment letter
The AFP comment letter was co-signed by:
- Benefit Resource, Inc.
- Blue Cross Blue Shield of Massachusetts
- Catholic Health Initiatives
- California ISO
- Centerline Capital Group
- Crawford & Company
- Grass Valley USA LLC
- Miami-Dade County Public Schools
- Solix, Inc.
- University of Colorado - Treasurer's Office
- WellCare Health Plans, Inc.