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Financial markets

ICI Urges Caution on Money Market Fund Reforms Amid COVID-19 Market Turmoil

Strategic Insights

— 1 min read

In response to the Securities and Exchange Commission's request for comments on potential options for money market fund reforms, Investment Company Institute (ICI) President and CEO Eric J. Pan emphasized the need to examine the root causes of market turmoil in March 2020, rather than placing new rules on money market funds. ICI's new data and analysis challenge the narrative that money market funds caused or amplified the stress in the short-term funding markets. The organization recommends removing the tie between the 30 percent weekly liquid asset threshold and the imposition of fees and gates, which would strengthen prime money market funds and improve the financial system's resiliency.

Key Takeaways:

  • ICI challenges the narrative that money market funds caused or amplified the stress in the short-term funding markets in March 2020, citing new data and analysis.
  • The organization recommends removing the tie between the 30 percent weekly liquid asset threshold and the imposition of fees and gates, to strengthen prime money market funds and improve financial system resilience.
  • Over 50 million retail investors and numerous corporations, municipalities, and institutional investors rely on $4.9 trillion in money market funds as low-cost, efficient, and transparent cash management vehicles.
  • Money market funds provide critical financing for governments, businesses, financial institutions, and households across the United States.
  • ICI commits to working with policymakers to further strengthen money market funds and the short-term funding markets for the benefit of investors and the economy.

Statistics:

  • $4.9 trillion: The total value of money market funds that millions of investors rely on as low-cost, efficient, and transparent cash management vehicles.
  • 50 million: The number of retail investors who rely on money market funds.
  • 30 percent: The threshold for the weekly liquid asset requirement that could trigger the imposition of fees and gates.
  • Enough: ICI's President and CEO Eric J. Pan, emphasizing caution in placing new rules on money market funds.

Sources:

  • [TNSRes - "ICI President and CEO Eric J. Pan on Money Market Fund Reforms Amid COVID-19 Turmoil"]
  • [ICI - "Letter to Securities and Exchange Commission on Money Market Fund Reforms"]

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