Former SEC Chair Mary Schapiro led a fight to reform the money fund industry. Her fight was not successful.
Now, three powerhouses—JPMorgan Chase & Co., The Goldman Sachs Group Inc., and BlackRock Inc. are beginning to publish the daily net asset values of their money market funds.
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The move is a step closer to the floating NAV Schapiro targeted as one way to protect investors.
The Investment Company Institute (ICI) fought the proposal saying it would cause a rush on money funds.
The three firms are not actually floating their funds NAVs. The value of shares will still be traded at $1 but the move will allow clients to see how the value of the funds fluctuates day-to-day.
Money fund NAVs are allowed to fluctuate between $1.0050 and $0.9995 and still maintain its $1 NAV.
Peter Crane of Crane Data says that it’s rare for fund values to move more than a thousandth of a cent day-to-day. It really takes an event to move the NAV more than that.
Of course, that’s exactly what happened to money funds during the 2008 crisis. When Lehman Brothers Holdings collapsed, the Reserve Primary Fund broke its $1 value, setting off a run on money funds.
That’s how money funds became a primary focus for the SEC.
There’s no way to tell if the publishing by the three major firms of their daily fund values will instigate other firms’ following suit or if it will have any impact on future regulation.
Financial Services Oversight Committee released for comment
a proposal for regulatory reform of money funds in November.