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Supporting S. 1117 and H.R. 2319
The Consumer Financial Choice and Capital Markets Protection Act of 2017

Preserving Money Market Funds for public infrastructure investment, economic development and job creation

WHO WE ARE

We are a Nonprofit Corporation organized to further the non-partisan common business interests of our members regarding matters of capital access and investment opportunity and choice for the public, nonprofit and private sectors.

The Coalition comprises:
  • State Treasurers
  • Universities
  • Hospitals
  • State and Local Governments

  • Businesses
  • Not-for-Profit Trade Associations
  • Organized Labor
  • Pension Funds


For 45 years, these organizations have relied on stable-share money market funds to finance public and private infrastructure while managing cash flow and safely investing surplus funds without jeopardizing liquidity needs.

WHY WE ARE SUPPORTING S. 1117 AND H.R. 2319,
THE CONSUMER FINANCIAL CHOICE AND CAPITAL MARKETS PROTECTION ACT

Starting in October 2016, two categories of money market mutual funds essential to state and local governments, businesses, non-profits and other organizations were forced to abandon a key feature: the funds will no longer be allowed to offer a stable $1 per share valuation.

This change has negatively impacted two kinds of funds vital to the needs of public and private organizations:

  • Stable value institutional prime money market funds, which invest in short term debt issued by businesses.
  • Stable value institutional tax-exempt money market funds, which invest in short-term debt issued by states and municipalities.

 

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Join the Coalition
Support S. 1117 and H.R. 2319, The Consumer Financial Choice and Capital Markets Protection Act
The Facts
The History

Created in the early 1970s, “institutional” Money Market Funds have become the standard for institutional investors cash management and financing needs, providing a safe, reliable way of maintaining cash liquidity while protecting the value of their cash assets. These funds also have provided a market for high-quality, short-term commercial and public debt.

THE REGULATIONS

By ending the stable $1 per share valuation, new government regulations eliminated a key aspect of Money Market Funds that make them a vital tool for institutions. Without a stable valuation, institutions will have trouble using these funds as a way of handling daily cash needs. The effects have already rippled across the economy as more than $1.15 trillion exited prime and tax-exempt money market funds, driving up borrowing costs and lowering returns on money market fund investments.


THE SOLUTION

The Consumer Financial Choice and Capital Markets Protection Act will restore Money Market Funds for all investors while ensuring continuing safeguards and the Securities and Exchange Commission’s careful regulation. The Consumer Financial Choice and Capital Markets Protection Act enables institutions to continue to access the high-quality, liquid cash management tools they have relied on for more than four decades.


THE CONSUMER FINANCIAL CHOICE AND CAPITAL MARKETS PROTECTION ACT

The Consumer Financial Choice and Capital Markets Protection Act would expressly state that an open-end investment fund may operate as a money market fund that computes its price per share under the stable NAV approach without regard to whether its investors are “retail” or “institutional”, provided that it meets the following requirements:

Its objective must be the generation of income and preservation of capital through investment in short-term, high-quality debt securities


Its board of directors must determine, in good faith, that it is in the best interests of the money market fund and its shareholders to operate on a stable NAV basis, and the money market fund may continue to operate on that basis only as long as the board of directors believes it fairly reflects the money market fund’s market-based NAV


It must comply with such quality, maturity, diversification, and liquidity requirements, and any other reasonable rules or regulations, that the Securities and Exchange Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors


A fund that chooses to operate as a stable NAV fund under the provisions of the bill shall not be subject to a requirement in Rule 2a-7 that a fund impose a liquidity fee when its weekly liquid assets have dropped below 10 percent.