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Money market mutual fund assets declined sharply following the April 15 tax payment date, as funds showed their 7th weekly decline in a row. ICI's latest "Money Market Mutual Fund Assets" says, "Total money market fund assets decreased by $35.02 billion to $2.58 trillion for the week ended Wednesday, April 16, the Investment Company Institute reported today. Among taxable money market funds, treasury funds (including agency and repo) decreased by $11.37 billion and prime funds decreased by $18.54 billion. Tax-exempt money market funds decreased by $5.11 billion." Year-to-date, money fund assets have declined by $142 billion, or 5.2%.

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ICI released its latest monthly summary of "Money Market Fund Holdings, March 2014" yesterday, the latest edition of its new series that tracks the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds (as of March 31, 2014). The release was also accompanied by a comment entitled, "Seasonality, U.S. Money Market Funds, and the Borrower of Last Resort from Economist Chris Plantier. Plantier writes in ICI's "Viewpoint", "The March money market fund holdings data indicate a large drop in the share of fund assets allocated to European counterparties and a large increase in the share of fund assets allocated to U.S. counterparties. This shift is likely temporary and reflects reduced willingness of European banks to borrow from money market funds at the end of the quarter, rather than reduced demand from money market funds. Also, the increase in lending to U.S. counterparties is almost entirely due to the large increase in money market fund lending to the Federal Reserve via its overnight reverse-repo (repurchase agreement) facility." (See Crane Data's April 10 News, "March MF Holdings Show Fed Repo Skyrockets, Other Securities Plummet".)

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Crane Data's most recent monthly Money Fund Intelligence Family & Global Rankings, which rank the asset totals and market share of managers of money funds in the U.S. and globally, shows asset declines by the majority of major money fund complexes in March and over the past quarter. (These "Family" rankings are available to our Money Fund Wisdom subscribers. SSgA, Western, First American and Deutsche showed some of the few gains in March, rising by $4.1 billion, $2.5 billion, $390 million and $229 million, respectively, while Morgan Stanley, SSgA, Northern, and T. Rowe Price led the increases over the 3 months through March 31, 2014, rising by $3.1B, $2.9B, $2.8B and $379M. Money fund assets overall fell by $25.9 billion in March, and fell by $69.5 billion in the first quarter of 2014 (according to our Money Fund Intelligence XLS).

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Moody's Investors Service published a "Sector Comment on European Money Market Funds" entitled, "Cancellation of European Parliamentary Vote Gives Temporary Reprieve to CNAV Fund Managers." It tells us, "On 10 March 2014, the European Parliament's Economic and Monetary Affairs Committee (ECON) decided to cancel a much anticipated vote on proposed changes to money market fund (MMF) regulation because of persisting disagreements between members of the European parliament (MEPs). The vote cancellation is at least a temporary positive reprieve for constant net asset value (CNAV) MMF managers. It gives them more time to prepare their clients and adjust their product strategy to the likely outcome of the regulatory reform. Most of the measures contemplated by the proposed regulations would reduce CNAV funds' attractiveness and likely cause investors to move some of their monies to other products."

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Another comment letter has appeared on the SEC's Money Market Fund Reform Proposal. The latest, from A Hester Peirce, Senior Research Fellow, and Robert Greene, Project Coordinator, The Mercatus Center at George Mason University, Arlington, Virginia, includes a paper, "Opening the Gate to Money Market Fund Reform," which supports the `emergency "gates" and fees alternative. It says, "On September 17, 2013, we submitted a public interest comment on the Security and Exchange Commission's (SEC) proposed rulemaking "Money Market Fund Reform; Amendments to Form PF." We argued that allowing a MMF's board of directors to discretionarily gate the MMF when the board deems that doing so is in the best interest of the fund more adequately meets the SEC's objectives than either of its two June 2013 proposed reforms. The attached working paper examines the rationale for, mechanics, benefits, and drawbacks of our discretionary gating proposal in more detail. We urge the SEC to review the paper's findings before finalizing its rulemaking for further MMF regulatory reform. Thank you for reviewing our proposal as the SEC considers this important next step in MMF regulatory reform."

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After several months of minimal feedback, the SEC has posted a number of "Comments on Proposed Rule: Money Market Fund Reform; Amendments to Form PF" over the past month. A recent letter comes from David F. Freeman, Jr., Arnold & Porter LLP, on behalf of Federated Investors, Inc., which explains, "Enclosed for filing in the above-referenced comment docket is a copy of a comment letter that we submitted to the Financial Stability Board/IOSCO on their Consultation Report on "Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions (BIS Ref. 1/2014)." The enclosed letter to the Financial Stability Board, International Organization of Securities Commissions, c/o Secretariat of the Financial Stability Board Bank for International Settlements addresses "Proposed Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions (Ref no: 112014)."

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That giant sucking sound you heard at month-end in March was money market investments leaving everywhere else and moving to the Federal Reserve Bank of New York's reverse repo program. Crane Data released its April Money Fund Portfolio Holdings yesterday afternoon, and our latest collection of taxable money market securities, with data as of March 31, 2014, shows a huge jump in Repo with the New York Fed and big declines in overall holdings, Time Deposits (the SEC's "Other" category), CDs and CP. Money market securities held by Taxable U.S. money funds overall (those tracked by Crane Data) decreased by $43.0 billion in March to $2.431 trillion. Portfolio assets decreased by $32.7 billion in February and by $258 million in January, after an increase of $55 billion in December. CDs remained the largest holding among taxable money funds, followed closely by Repo, then by Treasuries, CP, Agencies, Other, and VRDNs. Money funds' European-affiliated holdings plummeted again at quarter-end on the shift from dealer repo and time deposits into Fed repo; European holdings are now below 25% of holdings (down from 29.8% last month). Below, we review our latest portfolio holdings statistics.

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The Investment Company Institute published a press release entitled, "ICI: G-SIFI Designation of Regulated Funds Unnecessary and Inappropriate, Would Harm Investors", which says, "Designation of regulated funds like US mutual funds as "global systemically important financial institutions" (G-SIFIs) is neither necessary nor appropriate, ICI says in a comment letter to the Financial Stability Board. The consequences of designating such funds "would be highly adverse to the designated fund, its investors, the overall fund marketplace and fund investing at large," ICI says." The FSB proposed a threshold of $100 billion in assets for SIFIs, which would currently include just three money market funds -- Vanguard Prime MMF (VMMXX) at $130.7 billion, Fidelity Cash Reserves (FDRXX) at $116.4 billion, and JPMorgan Prime MM (CJPXX) at $110.9 billion as of March 31 (according to Crane Data's MFI XLS).

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Twenty-two U.S. Senators wrote a letter to SEC Chair Mary Jo White to urge the Commission to exempt Tax Exempt money funds from the floating NAV proposal, we learned from advocacy group PreserveMoneyMarketFunds.org. The letter says, "We write to you as former state and local officials who are concerned about a Securities and Exchange Commission ("SEC" or "Commission") regulatory proposal that would have a deleterious effect on the nation's states and municipalities. The proposal would subject municipal money market funds (MMFs) to a new round of significant reforms and impair the vital role that such funds have played in providing low-cost financing for state and local governments for some 40 years."

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The April issue of Crane Data's Money Fund Intelligence was sent out to subscribers on Monday morning. The latest edition of our flagship monthly newsletter features the articles: "More Talk, No Action Yet on Pending MMF Reforms," which reviews recent SEC speeches and comments on pending regulations; "Plaze Says Doing Nothing Better Than SEC Proposals," which interviews Stroock Partner and former SEC Deputy Director Bob Plaze; and, "Global MF Growth Led by China, US; EU Buffer Dies," which reviews the growth of global money fund markets. We also updated our Money Fund Wisdom database query system with March 31, 2014, performance statistics and rankings this morning, and we sent out our MFI XLS spreadsheet earlier. (MFI, MFI XLS and our Crane Index products are available to subscribers at our Content center.) Our March 31 Money Fund Portfolio Holdings data are scheduled to go out on Wednesday, April 9.

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U.S. Securities & Exchange Commission Commissioner Luis Aguilar spoke Wednesday at a mutual fund director's event on "Taking an Informed Approach to Issues Facing the Mutual Fund Industry," and he criticized FSOC and the OFR, and defended the SEC's turf overseeing mutual funds and money market funds. Aguilar comments, "There are a number of issues that are important to the asset management industry, including the Commission's recently proposed reforms to money market funds.... However, today I would like to focus my remarks on the following topics: First, the need to utilize the Commission's expertise in overseeing the asset management industry, including evaluating the risks that the industry may pose to our financial markets."

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On Wednesday, the Investment Company Institute released its latest data on "Worldwide Mutual Fund Assets and Flows (Fourth Quarter 2013," which shows that global money market mutual fund assets grew strongly in Q4'13. This follows a sharp rebound in Q3'13, when "cash" funds grew by $197.9B. (ICI began publishing their Worldwide statistics in 2004.) The latest data show worldwide money market mutual fund assets rising by $67.4 billion, led by large increases in Chinese and U.S. MMFs, in Q4'13. But MMF assets declined by $33.4 billion over the past year (through 12/30/13) to $4.760 trillion. Crane Data excerpts from ICI's latest release and analyzes the money fund portion of the ICI's latest global statistics, below.

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