Bloomberg writes "Floating Money Fund Price May Backfire, Panel Says," which says, "Forcing money-market funds to give up the stable $1 share price that helped the industry attract almost $3 trillion may lead to unpredictable investor responses, according to an advisory body to the Obama administration. While a floating net asset value may reduce the risk of a run on money funds during a crisis, such a change could push investors into unregulated substitutes and hurt the industry's ability to supply companies with short-term credit, according to a report published today by the President's Working Group on Financial Markets. The report, commissioned by the U.S. Treasury Department in June 2009 after the failure of the $62.5 billion Reserve Primary Fund caused a run on the industry, examines potential regulatory changes aimed at making money funds more stable without endorsing any option. The Working Group said it would ask the Financial Stability Oversight Council, established by the Dodd-Frank reform bill, to identify the best choices and that the Securities and Exchange Commission would seek public comments." "The report may raise more questions than it answers,” Bloomberg quotes Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts. "It doesn't appear to push policy in any one direction." See also, "ICI Responds to PWG Report on Money Market Funds" and ICI's weekly "Money Market Mutual Fund Assets".
Fund news source ignites wrote Friday, "New Disclosure Boosts Money Fund Transparency". It said, "Fund firms last week began posting their money fund portfolio holdings in a standardized format on their websites, as required under new SEC rules. While most money funds disclosed portfolio holdings on their sites previously, the new format signals a key change in a broader effort to boost transparency of the funds, analysts say." (See Crane Data's Oct. 13 News "Money Funds Disclosing Portfolio Holdings in New SEC Mandated Format".) The ignites piece continued, "In the past, the exact information provided and the formats that were used varied, as did the timing with which the disclosure was made. Most importantly, disclosure of the Cusip for each fund is now required. In the past, abbreviations for funds and name changes made it difficult to track a given fund's holdings, says Peter Crane, president of Crane Data." The article quoted Crane, "[The new disclosure] will be useful to fund managers looking at their competition, to issuers looking at who to sell to and media and regulators looking to say 'Gotcha' to somebody." It added, "Until last week, finding out which money market funds owned a particular security took a lot of digging, but now it will be much easier to obtain that information, says Crane." "The disclosure makes a portfolio X-ray type of feature with money funds possible, whereas it wasn't before," he says. Indeed, Crane says his firm is currently building a database of portfolio holdings for clients. An institutional investor, for example, that owns 10 money market funds may have had a hard time in the past knowing exactly what percentage of a given issuer the funds held in total. With the new data, it will be easier to determine that, both for the investor and the issuer of securities."