Nearly $1.2 trillion of private sector capital has left prime and tax-exempt money market funds as a result of a Securities and Exchange Commission (SEC) change to rule 2a-7 under the Investment Company Act that went into effect in October 2016. That rule change requires non-government money market funds available to “non-natural persons” to transact using a floating net asset value (NAV) instead of a stable NAV.
On May 19, 2016, Treasurer Ron Crane testified to the U.S. Senate regarding the unattended consequences of Rule 2a-7 and the lack of choices that states and other entities now have in regards to bonding capital projects.
SFOF joined the Coalition for Investors Choice, a coalition of over 300 organizations who have come together to further the non-partisan common business interests regarding matters of capital access and investment opportunity and choice for the public, nonprofit and private sectors. For 45 years, these organizations have relied on stable-share money market funds to finance public and private infrastructure while managing cash flow and safely investing surplus funds without jeopardizing liquidity needs.
SFOF continues to push for repeal of 2a-7 or for neutralization of the rule in 2019 and will continue to work with the Coalition for Investors Choice to pursue resolution of this issue.