Bloomberg wrote an article entitled, "BlackRock, Fidelity Seeking Money Fund Deal With SEC", which says, "Investment managers including BlackRock Inc. and Fidelity Investments, under pressure to preempt action by a new super-committee of regulators, are seeking to end an impasse over money-fund reform. Officials from several firms, as well as representatives from the Investment Company Institute, the industry's trade group, are scheduled to meet with the Securities and Exchange Commission and Treasury Department officials today to discuss proposals for a potential compromise, BlackRock spokeswoman Bobbie Collins and Fidelity spokesman Vincent Loporchio said today. The industry helped block a plan in August that was backed by SEC Chairman Mary Schapiro.."
Bloomberg writes, "The firms are pushing for an agreement amid the threat of action from the Financial Stability Oversight Council, or FSOC, a multi-agency panel of senior regulators formed by the Dodd-Frank Act. FSOC's most powerful figures, Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben S. Bernanke, have said money funds are a systemic threat to global financial markets. The body could intervene and submit money funds to direct regulation by the Fed."
The piece adds, "BlackRock, the world's largest asset manager, has held talks previously with SEC staff over a proposal that would include temporary withdrawal restrictions when money funds are under stress, said two people familiar with the matter, who asked not to be identified because the discussions were private. BlackRock published an outline of its plan in a Sept. 27 paper, proposing that money funds, under some circumstances, impose "stand-by liquidity fees" on investors who withdraw money. The fee would be triggered only when a fund's liquidity failed to meet existing minimums, or when a fund's mark-to-market share value dipped below a certain level." (See `Crane Data's Oct. 3 News "BlackRock Says Schapiro Proposals Flawed, Proposes Liquidity Fees".)
In other news, Federated Investors released its Third Quarter 2012 Earnings late yesterday (and hosts an earnings conference call Friday at 9am). The release says, "Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported earnings per diluted share (EPS) of $0.54 for the quarter ended Sept. 30, 2012 as compared to $0.37 for the same quarter last year. Net income was $55.8 million for Q3 2012 compared to $38.3 million for Q3 2011. Federated's Q3 2012 financial results include the recognition of insurance proceeds, which reduced pre-tax operating expenses by $17.3 million and increased EPS by $0.11 per share, after tax. Federated reported YTD 2012 EPS of $1.33 compared to $1.09 for the same period in 2011 and net income of $138.5 million compared to $114.0 million for the same period last year."
It explains, "Money market assets in both funds and separate accounts were $269.6 billion at Sept. 30, 2012, down $2.1 billion or 1 percent from $271.7 billion at Sept. 30, 2011 and up $4.1 billion or 2 percent from $265.5 billion at June 30, 2012. Money market mutual fund assets were $244.8 billion at Sept. 30, 2012, down $0.5 billion from $245.3 billion at Sept. 30, 2011 and up $6.2 billion or 3 percent from $238.6 billion at June 30, 2012. Additionally, Federated announced in July that the commonwealth of Massachusetts had selected the company to manage two pools of assets with more than $9 billion in liquidity and short-term bond assets. Federated is expected to begin managing those assets in early 2013."
The company adds, "Revenue increased by $24.4 million or 11 percent due primarily to a decrease of $19.4 million in voluntary fee waivers related to certain money market funds in order for these funds to maintain positive or zero net yields. The reduction in fee waivers was primarily the result of improved yields available on securities held by money market funds. In addition, revenue increased due to an increase in average fixed-income and equity assets. See additional information about voluntary fee waivers in the table at the end of this financial summary. During Q3 2012, Federated derived 52 percent of its revenue from equity and fixed-income assets (31 percent from equity assets and 21 percent from fixed-income assets), 47 percent from money market assets and 1 percent from other products and services."