ICD Commentary™ Operational and Accounting Issues with the Floating NAV and the Impact on Money Market Funds Reveals Major Operational and Accounting Problems in Enacting SEC Regulatory Proposal Currently Under Consideration

Industry leader in global portal investments and risk management questions the viability of implementing same-day, mark-to-market pricing for Money Market Funds, exposing a myriad of operational and accounting issues that would disrupt an otherwise historically stable and critically important short-term liquidity market.

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Institutional Cash Distributors, LLC

Jul 25, 2013, 10:16 ET

SAN FRANCISCO, July 25, 2013 /PRNewswire/ --

OPERATIONAL ISSUES – A floating NAV will require one of the following new settlement alternatives:

Delivering payments post end of day pricing;
Pricing several times per day; or
Day after pricing (or T+1)

ACCOUNTING ISSUES - Corporations would have to begin monitoring their mark-to-market value and report on any minute gains or losses resulting in:

A need for a significant overhaul of general accounting standards; or
An additional accounting burden on US corporations

Institutional Cash Distributors (ICD) today announced the release of ICD Commentary™ Operational and Accounting Issues with the Floating NAV and the Impact On Money Market Funds which questions the viability of the SEC's floating Net Asset Valuation proposal for prime Money Market Funds. Fundamental operational and accounting issues would upend the trading process, deter investors from investing in money market fund products, and thereby reduce the availability of affordable short-term financing for corporations, municipalities and state governments.

The SEC's proposed floating NAV has been hotly debated by academics, economists and regulators, but little focus has been placed on the "ground-level" accounting and operational issues that would transform the daily trading process. ICD's SVP Global Trading Operations, Sebastian Ramos commented, "To date, the arguments for and against the implementation of a fluctuating NAV have been reasoned and passionate, but nearly all of the deliberation has taken place at the 30,000 foot level."

One of the largest institutional investment portals, ICD deals with the granular functional realities of Money Market Fund trading for a substantial percentage of the institutional investor market. In examining the transactional realities of implementing a floating NAV from an accounting and execution perspective, what emerges is a problematic methodology with operational repercussions that could not only bring fundamental and severe changes to Money Market Funds, but could marginalize investment in these products and drive corporate cash to alternative and riskier investments.

"When we originally presented this argument in February 2012, it was in response to media reports of the SEC deliberations on a Floating NAV. In reviewing the proposal currently on the table, while some of the details and arguments at the periphery have changed, the core challenges surrounding the operational and accounting hurdles of a Floating NAV still remain as relevant as ever," added Ramos.

About ICD: ICD is the world's leading institutional investment and risk management company. ICD's next-generation Software-as-a-Service portal, best practices methodologies and award-winning Transparency Plus® exposure analytics, support corporate treasury with end-to-end solutions. The ICD Global Trade Desk™ provides expert service out of San Francisco and London. ICD develops its own proprietary technologies through Institutional Cash Distributors Technology LLC in Golden, Colorado. Institutional Cash Distributors LLC is a FINRA/SIPC member. Institutional Cash Distributors Ltd is authorized and regulated by the Financial Conduct Authority in the United Kingdom. For more information, visit http://www.icdportal.com or email [email protected].

Media Contact
Debby Barri, ICD Public Relations Director
424-206-2402, [email protected]

SOURCE Institutional Cash Distributors, LLC