The Association for Financial Professionals wrote yesterday, "Money Market Fund Reforms Appear Imminent." It says, "Since the fall of 2008, a great deal of attention has been given to the safety and soundness of money market mutual funds (MMFs). The focus on this issue was triggered in September 2008 by the Reserve Primary Fund "breaking the buck," or lowering its share price below the $1 fixed net asset value (NAV) that is currently associated with most money funds.... The MMFs most commonly used by retail and institutional investors are regulated by the Securities and Exchange Commission (SEC) under Rule 2a-7 of the Investment Company Act of 1940.... On several occasions since the release of this information nearly two years ago, AFP has expressed concerns regarding the option to eliminate the stable net asset value (NAV) in favor of a floating NAV and has been clear on our opposition of such a proposal. We believe it would greatly reduce investors' interest in utilizing MMFs as a cash management and investment tool, whether applied to all investors or just institutional investors. For purchasers of MMFs, the return of principal is a much greater driver of the investment decision than return on principal.... Fast forward to January 2012 and it is clear that these issues are still at the forefront of the regulator's mind. It is expected that SEC will release additional rules and guidance on this issue in early 2012. In anticipation of this action, AFP is preemptively reiterating our position to the SEC and collecting the names of companies who share our views. AFP will send a joint letter highlighting our concerns and we invite you to sign on to this letter and add your company name to the effort. If you would like to receive a copy of the draft letter or have questions, please contact me at jarnett@AFPonline.org or visit AFP's Money Market Fund Resource Center."
