Money Market Funds in 2012

During their history of 30-plus years, money market funds have emerged as a steady, predictable mainstay of finance. They provide a preferred vehicle for cash management for individuals, businesses, nonprofit organizations, and government agencies, and play a critical financing role in the U.S. economy.

Despite the effectiveness of the extensive 2010 money market fund reforms by the Security and Exchange Commission (SEC), regulators reportedly continue to pursue flawed proposals that will harm investors, damage financing for businesses and state and local governments, and jeopardize a still-fragile economic recovery. ICI believes these proposals are unnecessary.

This page provides background, analysis, and data on regulators’ ongoing examination of money market funds and other issues surrounding these funds. ICI will update this page as events unfold.

The Latest Money Market Fund Developments on ICI Viewpoints

Commentators have recently suggested that worries about the impact on investors of forcing money market funds to float their net asset value (NAV) may be overblown. The story goes like this: the mark-to-market prices of money market funds, and the experience of a few money market funds that already operate with a floating NAV, show that fluctuations in the “floating” value would be minuscule—rarely large enough to change the penny-rounded per-share price of the fund. So if floating funds don’t float, what’s the harm?

Jane Heinrichs, ICI Senior Associate Counsel, and Greg Smith, ICI Director of Compliance and Accounting, examine the question and find two serious problems—cost and benefit. Floating funds that don’t float will bring very high costs, but they won’t provide any benefits. For this and other ICI commentary, follow the money market fund thread at ICI Viewpoints.