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AFP Opposes Floating NAV in New Comment Letter to SEC

  • By Staff Writers
  • Published: 2012-04-05

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 here.

The AFP comment letter was co-signed by:

  • Benefit Resource, Inc.
  • Blue Cross Blue Shield of Massachusetts
  • CacheMatrix
  • Catholic Health Initiatives
  • California ISO
  • CareSource
  • 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.

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All rights reserved.

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