The Investment Company Institute is staunchly against SEC reforms to float the net asset value on money markets but believes a type of “gates and fees” could pose as a better solution. In either case, short-term bond exchange traded funds stand to gain a competitive advantage.
“Let’s check the count against floating NAVs,” ICI President and CEO Paul Stevens said, according to ICI. “They don’t address regulators’ goals. They eliminate key benefits to investors. They harm the economy. They increase systemic risk. And they carry immense costs and operational complications.”
“Simply put, forcing funds to float their NAVs doesn’t address the problem that most preoccupies many regulators—how to avert heavy redemptions out of money market funds,” Stevens added. [Short-Duration ETFs Could Capitalize on Money Market Fund Reforms]
His concerns are also voiced by many groups, individuals, businesses, state and local governments, and nonprofit organizations that are against a changing $1.00 value of money market funds. [Short-Duration ETFs Can Substitute for Money Market Funds]
“Since 2009, hundreds of entities from the private and public sectors across the economy have expressed their opposition to floating NAVs and other ill-considered proposals,” Stevens said. If money markets had a floating NAV, “corporate America could see a significant reduction in the supply of short-term credit,” and “the pool of capital that state and local governments use for financing vital needs will shrink or dry up.”