The AFP posted a piece entitled, "President's Working Group Suggests More Reforms for Money Market Funds". It says, "Last week, the President's Working Group (PWG) on Financial Markets issued a report suggesting more reforms to ensure the resiliency of money market funds during periods of financial crises. The PWG, which is chaired by the Secretary of the Treasury, is comprised of the Chairs of the Federal Reserve Board (Fed), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) outlined a list of options they said would reduce money-market funds' vulnerability to investor runs. The list of options included a discussion of a previously withdrawn proposal for floating net asset values. In the report, the PWG indicated that switching money-market funds to a floating net asset value, or NAV, could reduce risk, but gave only measured support for such a change. Switching to a floating NAV "would have potential benefits, but those benefits would have to be weighed carefully against the risks that such a change would entail," the report said.... In the past, AFP's Government Relations Committee (GRC) has weighed in on the floating NAV issue and sent a comment letter to the SEC opposing the elimination of the stable NAV in favor of a floating NAV. AFP believes the introduction of a floating NAV would greatly reduce investors' interest in utilizing MMFs as a cash management/investment tool. AFP has consistently stated that for purchasers of MMFs, the return of principal is a much greater driver of the investment decision than return on principal. Likewise, for a large number of institutional investors, the potential of principal loss would preclude MMFs with a floating NAV from being an approved investment alternative."
