August 7, 2013
Elizabeth M. Murphy
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Dear Elizabeth Murphy:
I oversee ~$2 billion in individual client funds. Clients rely on the liquidity of their money market funds to make purchases, sales and to pay their bills. They also cherish the simplicity of money market mutual funds to accomplish this.
If we are going to regulate money markets, let's not change the $1 stable value NAV concept. Instead, let's allow fund companies to put up a gate if there is a liquidity issue. Or perhaps the government could create a permanent liquidity facility, subject to certain minimum credit guidelines, that money markets could borrow from in an emergency. This would be similar in spirit to what FDIC insurance does for deposit accounts, providing confidence to the public.
It's not time to dismantle money market funds. It's time to ensure their liquidity during a liquidity crisis - at least for those funds adhering to proper management of their assets. There are many ways to do this, but unless we are ready to de-regulate CDs and checking account protection with FDIC insurance, why are we ready to de-regulate money funds and force them to a daily NAV calculation? I see these two issues as parallels in the investment universe.