Chamber's CCMC Comments to SEC
We've excerpted from most of the relevant "Comment[s] on Potential Money Market Fund Reform Measures in President's Working Group Report" sent in to the SEC, but we still have a few to go. Today, we quote from another one, which says, "The Center for Capital Markets Competitiveness ('CCMC') is pleased to provide comments on the Request for Comment issued by the Securities and Exchange Commission, on 'Potential Money Market Fund Reform Measurers in President's Working Group Report.'" It continues, "Money market funds (MMFs) exist for the ease of short-term cash management and investment and provide economic benefits to issuers and investors, including individuals, governmental entities, and businesses. As of September 30, 2020, total industry MMF net assets were $4.9 trillion, demonstrating the importance of these investment vehicles for the operation of short-term markets. For many businesses, including those that make up the membership of the U.S. Chamber of Commerce (the 'Chamber'), MMFs are the preferred way to manage fluctuations in cash and to ensure adequate cash flow when needed. Businesses across the country benefit from MMFs in two ways -- as an investment tool for working capital and as a market for the instruments they issue to finance short-term funding needs. Cash inflows and outflows don't always line up, and MMFs act as a financial intermediary in helping businesses offset these discrepancies." The Chamber writes, "The market volatility experienced in March 2020 was the first significant test of these rules' effectiveness. Despite the reforms, the Federal Reserve Board, with the support of the U.S. Treasury Department, intervened in short-term markets via liquidity facilities authorized under Section 13(3) of the Federal Reserve Act including the Money Market Mutual Fund Liquidity Facility (MMLF). The Chamber does not believe inadequate regulation of MMFs was central to the liquidity crisis experienced in short-term funding markets; however, we do believe modest reforms to financial regulation could improve investor confidence in financial markets." They add, "The Chamber appreciates the Commission soliciting feedback from the public before rushing to implement changes to Rule 2a-7. We believe a measured approach, that holistically considers all aspects of short-term funding markets and that preserves the unique benefits provided by MMFs to investors and issuers, is warranted. While reforms to Rule 2a-7 may be appropriate for funds that experienced significant outflows in March 2020, financial regulators should also consider if there are opportunities to improve upon regulation that would limit disincentives for banks to intermediate in short-term funding markets. If the Commission determines Rule 2a-7 are necessary, we would encourage a close review of market behavior by investors confronted by the tie between gates and fees."
