Six days after the Securities and Exchange Commission holds a roundtable discussion regarding money market funds and systemic risk, the Investment Company Institute (ICI) will host its own one-day money market fund summit.
ICI, the national association for bond, stock and money market mutual funds, plans to bring together top analysts and industry leaders to discuss the current state of money markets, progress to date in strengthening money market funds since the financial crisis, and the future of money market fund regulation.
The ICI has proposed an emergency liquidity facility be created to stem future crises involving money market mutual funds. Other alternatives include the special purpose entities proposed by BlackRock and mandated reserves, proposed by Fidelity Investments.
The proposals come more than two years after the Reserve Primary Fund, the nation's oldest money market fund, "broke the buck" in the midst of the nation's financial crisis. Heavily weighted in Lehman Brothers securities, the value of the fund's assets plunged to 97 cents a sure, below the fundamental promise of money market funds to maintain a net asset value of $1.00 a share.
“Our goal has been to find a solution that focuses on providing additional liquidity to the marketplace,’’ said ICI spokeswoman Ianthe Zabel. “Liquidity is a common good in the markets and the liquidity facility is designed to ensure liquidity is available to money market funds even when the markets freeze up.
“Fidelity and BlackRock have put forth recommendations as well and we applaud them for bringing ideas to the debate,’’ she said. “We are reviewing their proposals. All the solutions have pros and cons.”
ICI’s summit will feature keynote speeches from F. William McNabb III, Chairman and CEO of The Vanguard Group, and Doug Holtz-Eakin, president of American Action Forum, a policy institute whose board members include former Internet entrepreneur James Barksdale, former labor secretary Elaine Chao and former Florida Governor Jeb Bush.
Anthony Carfang, partner and director at consulting firm Treasury Strategies, will discuss the global money market fund industry
Karrie McMillan, general counsel of ICI, Travis Barker, chairman of the Institutional Money Market Funds Association in London, and others will discuss the topic of money market fund regulatory changes since the 2008 financial crisis.
Paul Schott Stevens, president & CEO of ICI, will moderate a panel about the future of money market fund regulation.
Panelists include Andrew J. "Buddy" Donohue, partner, Morgan, Lewis, & Bockius LLP and former director of SEC's Division of Investment Management, and Erik R. Sirri, Professor of Finance, Babson College.
The summit will be held Monday, May 16, at the St. Regis Hotel in Washington, D.C.
The SEC’s roundtable on Tuesday, May 10, will be held at its headquarters in Washington, D.C. The roundtable will include participants from the new systemic risk oversight body, the Financial Stability Oversight Council (FSOC).
The roundtable is expected to include sponsors of money market funds, short-term debt issuers, investors, and the academic community.
The roundtable discussion will begin at 2:00 p.m. Eastern time and will be Webcast from http://www.sec.gov. Seating for the public will not be available, but the Webcast will be archived for later viewing.