9.9.2009 The Investment Company Institute (ICI) expressed its generally strong support for the SEC’s proposals to tighten the regulation of money market funds, but reiterated its opposition to the concept of requiring funds to adopt a floating net asset value (NAV) in place of the $1.00 stable NAV that money market fund investors prefer. ICI said the stable $1.00 NAV provides shareholders convenience and simplicity in terms of tax, accounting and recordkeeping. In a comment letter to the SEC, ICI also detailed the potential negative consequences to the economy of moving to a floating NAV, including:

  • An increase of systemic risk to the financial system as institutional investors seek investment opportunities in alternative investments that are not similarly regulated;
  • A significant reduction in the supply of short-term credit to corporate America; and
  • Loss of an important source of financing for municipalities in the short-term markets.

Click http://www.ici.org/pressroom/news/09_news_sec_mmf_ref to access the release.