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Rating:Top Regulators Waffle Over Floating NAVs For Money Funds Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, October 22, 2010

Top Regulators Waffle Over Floating NAVs For Money Funds

News summary by MFWire's editors

Fundsters worried about further money market fund regulations, including the possibility of required floating NAVs, may want to take a look at a new report from the President's Working Group on Financial Markets. The group ponder are mulling over whether requiring money funds to use floating NAVs (net asset values, i.e. share prices, which are normally set at $1 for money funds) would be worth it.

The group includes top financial regulatory executives on President Obama's team, including SEC chair Mary Schapiro, Treasury Secretary Tim Geithner, Federal Reserve chairman Ben Bernanke and CFTC chairman Gary Gensler.

"A floating NAV may not substantially improve investors' understanding of the riskiness of MMFs or reduce the stigma and systemic ricks associated with breaking the buck," the group's report reads. "Requiring the entire MMF [money market fund] industry to move to a floating NAV would have some potential benefits, but those benefits would have to be weighed carefully against the risks that such a change would entail."

They released the report yesterday, asking the new Financial Stability Oversight Council (created by the Dodd-Frank financial reform act) to discuss a number of options (the report discusses eight, not just requiring floating NAVs). And the group wants the SEC to get more public comments on further possible money fund reforms to help the FSOC evaluate the options.

Dow Jones' Jessica Holzer and the Associated Press' Daniel Wagner both covered the report. 

Edited by: Neil Anderson, Managing Editor

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