By Brian Kalish of Association for Financial Professionals
AFP is joining a broad-based corporate effort to protect the ability of money market funds to operate with a stable $1.00 net asset value (NAV). In a forthcoming comment letter to the Securities and Exchange Commission (SEC), AFP will repeat its opposition to proposals that could undermine the usefulness of money market funds by requiring them to use a floating NAV.
"American business will lose one its most important sources of short-term funding if money market funds are forced to abandon their stable per-share value," reads the letter.
The comment letter will be signed by AFP along with the U.S. Chamber of Commerce, Financial Executives International (FEI), and the National Association of Corporate Treasurers. All four groups are encouraging their members to join in this effort by signing the letter as individual companies.
Corporate finance professionals depend on money market funds as key instruments for cash management and short-term investing. The stable $1.00 NAV provides key accounting and tax benefits for cash managers, and is required by many companies' treasury policies. Forcing these funds to adopt a floating NAV would gravely harm their usefulness and drive away investors. Shrinking money market funds would harm corporate financing in turn, as these funds purchase approximately one-third of corporate commercial paper.
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