The money fund industry vows to fight the idea and other potential rules, including capital buffers for managers and restrictions on how quickly investors can pull 100% of their cash from money funds. [Money Market Rules May Boost Short-Duration ETFs]
Essentially, the floating NAV rule would allow money market funds to “break the buck,” or let the share price fall below $1. The 2008 financial crisis escalated to a new level after the oldest money market fund broke the buck following the collapse of Lehman Brothers.
The new rules “would make U.S. money market funds considerably less appealing to chief financial officers and treasurers investing corporate cash,” CFO.com reports. “The rules also cause yields on money funds to fall in an already low interest-rate environment.
Some experts say allowing the NAV of a money fund to rise and fall daily like other mutual funds could scare companies away from investing in money markets, according to the report.