Preserving Money Market Funds for public infrastructure investment, economic development and job creation
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.
- State Treasurers
- State and Local Governments
- 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. 733
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.
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.
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 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 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: