The $2.6 trillion money market landscape could be shifting as the industry faces broad regulatory changes. Meanwhile, some are beginning to look toward short-duration bond exchange traded funds as a suitable alternative to money market funds.
Proposals for a floating NAV and other regulatory changes to the money markets have been previously voted down in the Securities and Exchange Commission. However, with the new chairwoman Mary Jo White, the agency expects “to have something for the commission’s consideration in the near future,” the New York Times reports.
In a conference call, BlackRock CEO Laurence Fink commented on the company’s meetings in Washington that has left him with the impression that a floating NAV idea could soon be real, reports Joe Morris for Ignites. [Money Fund Changes May Drive Interest in Short-Duration ETFs]
“I expect it’s going to be some form of floating NAV,” Fink said in the Ignites article. “We had a whole team in Washington this week; it’s a pretty dynamic situation, but I do believe now, with a chairperson being finalized, I think we’re going to see some type of announcement from the SEC shortly.”
The floating net asset value on prime money market funds would be a departure from the current stable $1 share price the funds are known for. Floating the NAV has garnered greater support after the Lehman collapse that caused a money market fund to begin trading below the $1 share price, which fueled a run on the money market before the government stepped in. [Short-Duration Bond ETFs Eye Money Fund Reform]