Fidelity Investments ratcheted up its rhetoric against money-market fund reform, warning U.S. regulators on Thursday that proposed changes would "ultimately destroy" the $2.7 trillion industry and disrupt financing for American businesses.
In a comment letter to the U.S. Securities and Exchange Commission, the largest U.S. money fund sponsor said proposals that include requiring more capital and placing restrictions on investor redemptions would be disruptive to the industry and put even greater strain on the federal guarantees that back bank deposits.
"In particular, we continue to believe that proposals such as floating (net asset value), imposing onerous capital requirements or adding burdensome redemption restrictions will ultimately destroy the money market fund industry," Fidelity said.
"The demise of money-market funds would remove important short-term financing capacity form the markets, inevitably resulting in less credit extension that would impact businesses large and small," Fidelity said.
Fidelity and other money-market fund sponsors fear that tighter regulations under review by the SEC would drive investors to other investment vehicles, particularly banks.
Another big money fund sponsor, Federated Investors , has threatened to file a lawsuit to block reforms.
Fidelity's letter to the SEC stressed that reforms the SEC put in place in 2010 after the credit crisis has made money-market funds stronger and more liquid than ever.
Both companies say the funds' ability to survive investor withdrawals last summer during the European sovereign debt crisis shows their new resilience.
In a comment letter to the U.S. Securities and Exchange Commission, the largest U.S. money fund sponsor said proposals that include requiring more capital and placing restrictions on investor redemptions would be disruptive to the industry and put even greater strain on the federal guarantees that back bank deposits.
"In particular, we continue to believe that proposals such as floating (net asset value), imposing onerous capital requirements or adding burdensome redemption restrictions will ultimately destroy the money market fund industry," Fidelity said.
"The demise of money-market funds would remove important short-term financing capacity form the markets, inevitably resulting in less credit extension that would impact businesses large and small," Fidelity said.
Fidelity and other money-market fund sponsors fear that tighter regulations under review by the SEC would drive investors to other investment vehicles, particularly banks.
Another big money fund sponsor, Federated Investors , has threatened to file a lawsuit to block reforms.
Fidelity's letter to the SEC stressed that reforms the SEC put in place in 2010 after the credit crisis has made money-market funds stronger and more liquid than ever.
Both companies say the funds' ability to survive investor withdrawals last summer during the European sovereign debt crisis shows their new resilience.
CNBC
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