Why does the report oppose requiring money market funds to “float” their share price, rather than allowing them to maintain a fixed NAV at $1.00?
The $1.00 NAV is a fundamental characteristic of money market funds, and the Working Group concluded that investors would be far less likely to use the product without it. Floating the NAV would not relieve market pressures on funds. In fact, in recent months, other products that use a floating NAV experienced similar redemption and market stress problems as fixed-NAV money market funds. Ingrained institutional motivations and legal, tax, and accounting factors all drive the demand for stable-NAV products. If money market funds were barred from offering a stable NAV, investors would continue to seek such a product and would turn to cash pools that are less regulated than money market funds.
Related Questions
- Why does the report oppose requiring money market funds to "float" their share price, rather than allowing them to maintain a fixed NAV at $1.00?
- What does the Report say about the Treasury Guarantee Program for Money Market Funds? Will this program become permanent?
- How are money market funds regulated, and how do money market funds seek to maintain a stable $1.00 net asset value?
