NACUBO Urges Preservation of Rules for Money Market Funds

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October 7, 2009

In response to a request for comments issued by the Securities and Exchange Commission (SEC), NACUBO urged the preservation of special rules that allow money market funds to maintain a stable net asset value.

The SEC published a notice of proposed rulemaking (NPRM) in the July 8th Federal Register to amend the rules governing money market funds. In addition to making a number of proposed rule changes, the SEC requested comments on the possibility of eliminating the ability of money market funds to use the amortized cost method of valuation. The use of this valuation method allows money market funds to maintain a stable $1.00 net asset value (NAV). The Commission's notice acknowledged that the stable NAV has been "one of the trademark features of money market funds."

In its comments, NACUBO noted the various ways that money market funds fit into the overall financial management of colleges and universities, as well as serving as a supply of capital for investment in the debt issued by institutions of higher education. NACUBO urged the SEC to tailor any changes to the rules regarding money market funds to the specific issues of concern rather than rewriting the place they play in our financial markets.