ICI president and CEO Paul Schott Stevens used his Monday morning address at the ICI Mutual Funds and Investment Management Conference as another opportunity to attack the idea of money market mutual funds adopting a floating net asset value. In his speech at the JW Marriott Desert Ridge Resort & Spa, Stevens also told attendees that the ICI is "moving forward rapidly" to complete a blueprint for a liquidity facility.

Paul Schott Stevens ICI President and CEO

"I can't give you an exact timetable on when -- or even if -- this liquidity facility might be launched," Stevens said. "I can tell you that ICI’s Executive Committee supports establishing such a facility if industry participants and regulators can agree on a workable model."

With regards to the floating NAV proposal, Stevens warned that such a move would kill these funds as we know them–without reducing systemic risk. In fact, it seems highly likely that the world would be a riskier place for investors, for issuers, and for the markets."

He said retail and institutional investors "clearly see" the benefits of stable-value funds, pointing out that at the end of last year, there were $2.9 trillion in taxable money market funds compared with $184 billion for short-term bond funds.

In addition, Stevens pointed to the experience of French floating-value money market funds, which he said shows that a fluctuating-per share value would not erase the possibility of wholesale redemptions. The French floating-value money market funds, he said, lost about 40 percent of their assets from July 2007 to September 2007.  

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