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A press release entitled, "Fitch Assigns First-Time Rating to Federated Prime Private Liquidity Fund" indicates that the first of a handful of "private" money market funds is approaching launch and live status. It says, "Fitch Ratings has assigned an 'AAAmmf' rating to the Federated Prime Private Liquidity Fund, a separately designated series of Federated Private Liquidity Funds, a Delaware statutory trust, managed by Federated Investment Counseling (Federated). The fund commenced operations on September 22 and Fitch's analysis was conducted based on the fund's expected portfolio composition and Federated's experience in managing funds with similar strategies."

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The total amount of money that's moved out of Prime and Tax Exempt MMFs combined hit $900 billion this week, as the "Big Shift" of assets into Government money funds accelerated ahead of approaching money market reforms. ICI's latest "Money Market Fund Assets" report shows MMFs overall increasing $10.7 billion in the latest week, after dropping sharply two straight weeks. Prime funds fell by over $60 billion for the second week in a row; they've declined in 16 out of the past 17 weeks (-$496.8B) and have averaged outflows of $29.0 billion a week since June 1 and $52.1 billion since Sept. 1. Since Oct. 29, 2015, Prime assets have fallen by a massive $789.3 billion, or 54.1%, and Tax Exempt funds have declined by another $107.5 billion, or 43.9%. Combined these two sectors have fallen by $896.8 billion (52.6%) since this giant migration started, and we expect the total shift to break $1.0 trillion ahead of the Oct. 14 MMF Reform "live" deadline.

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The Investment Company Institute released its latest "Worldwide Mutual Fund Assets and Flows" data collection recently. The latest report shows that total global money fund assets declined by $67.1 billion, or 1.3%, to $4.996 trillion in Q2 2016. The U.S., China and Luxembourg suffered the biggest declines, while France, Korea and Brazil saw gains. Worldwide MMF assets have increased by $136.0 billion, or 2.8%, over the previous 12 months through 6/30/16. We review the latest Worldwide MMF totals below, and we also discuss Crane Data's latest MFI International statistics below. (Thanks to those who participated and supported Crane's European Money Fund Symposium in London this week! Watch for coverage of some sessions in next week's News.)

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FIS, formerly SunGard, released its "FIS' 2016 Cash Investment Survey" last week, which attempts to gauge corporate investors preferences regarding the new post money fund reform liquidity regime. It explains, "Rapidly changing economic and regulatory conditions are creating enormous investment challenges for organizations globally. With low and negative interest rates, changing bank appetite, and new instruments emerging, how do treasurers and CFOs define, and deliver on, the right investment policies to reflect these changing times?"

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This month, MFI interviews several key members of Western Asset Management's Liquidity Business, including Client Service Executives John Bonczek and Zak Green, and Head of Liquidity Justin Rose. The three discuss the current cash environment, both in the U.S. and "offshore," and recent changes at Western, which is an affiliate of Legg Mason. Our discussion follows. (The interview below is reprinted from our Sept. Money Fund Intelligence.)

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The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds"). Among the 4 tables it includes on money market mutual funds, the Second Quarter, 2016 edition shows that the Household Sector remains the largest investor segment, though assets here declined again and fell back below the $1.0 trillion level. Funding Corporations, Nonfinancial Corporate Businesses and Private Pension Funds showed gains in the latest quarter, while Funding Corporations, Nonfinancial Corporate Businesses, State & Local Governments, and Private Pension Funds showed increases over the past 12 months. We review the latest Fed Z.1 numbers below, and we also review the ICI's latest "Money Market Fund Holdings" summary below.

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Prime money fund assets saw their biggest drop of the year over the past week, losing $61.8 billion, as the "Big Shift" of assets into Government money funds accelerates as we approach October. ICI's latest "Money Market Fund Assets" report shows MMFs overall decreasing $38.5 billion in the latest week, their second sharp drop in a row and 4th in the past 5 weeks. Prime funds fell almost twice as much as the previous week, when they declined by $37.3 billion; they've declined in 15 out of the past 16 weeks (-$436.6B) and have averaged outflows of $27.0 billion a week since June 1, $37.0 billion since August 1, and $47.0 billion since Sept. 1. Since Oct. 29, 2015, Prime assets have fallen by a massive $729.1 billion, or 50.0%, and Tax Exempt funds have declined by another $102.0 billion, or 41.6%. Combined these two sectors have fallen by $831 billion since this giant migration started, and we expect the total shift to break $1.0 trillion ahead of the Oct. 14 MMF Reform "live" deadline.

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Dechert published a new "OnPoint" legal update, entitled, "CFTC Guidance on FCM and DCO Investments in Money Market Funds." The brief, written by Stephen Cohen, Jack Murphy, Philip Hinkle, and Neema Nassiri, says, "Divisions of the U.S. Commodity Futures Trading Commission (CFTC) on August 8, 2016 issued letters restricting futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) from investing in money market funds that have the authority to impose redemption restrictions under 2014 amendments to Rule 2a-7 under the Investment Company Act of 1940 (Amended Rule 2a-7). FCMs and DCOs will nonetheless continue to be permitted to make certain investments in other money market funds, as discussed below." (See our August 25 News, "CME Says CFTC Interpretation to Prohibit Prime Money Funds for Margin.")

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Ahead of next week's Crane's European Money Fund Symposium (Sept. 20-21 at the London Tower Bridge Hilton), we noticed some fresh analysis and new product announcements involving European and "offshore" money market mutual funds. J.P. Morgan Securities latest "Short-Term Fixed Income" discusses how offshore prime money market funds are not shortening maturities or avoiding CDs and CP like their U.S. counterparts, and J.P. Morgan Asset Management announced the launch of a new "enhanced cash" Sterling fund. We review these updates below, and we look forward to seeing many of you in London next week.

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Crane Data released its September Money Fund Portfolio Holdings yesterday, and our latest collection of taxable money market securities, with data as of August 31, 2016, shows big increases in Repo and Treasuries, and big decreases in CDs and CP. Money market securities held by Taxable U.S. money funds overall (tracked by Crane Data) increased by $75.9 billion to $2.668 trillion last month, after increasing by $47.9 billion in July, decreasing by $59.7 billion in June, and increasing by $24.6 billion in May. Repos remained the largest portfolio segment, followed by Treasuries and Agencies. "Credit" instruments continued to shrink dramatically as the shift from "Prime" to "Government" money funds accelerated in August. CDs were in fourth place, followed by Commercial Paper, Other/Time Deposits and VRDNs. Money funds' European-affiliated securities fell to 24.9% of holdings, down from the previous month's 26.7%. Below, we review our latest Money Fund Portfolio Holdings statistics.

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HSBC, the 21st largest manager of U.S. money funds with $13 billion ($5.7B in Prime) and 16th largest manager globally with approximately $50 billion, is the latest fund manager to exit the "Prime" money market fund space entirely. (HSBC liquidated its Tax Exempt MMFs in March 2013.) The manager joins a host of others, including Deutsche, TDAM, RBC, Franklin, American Funds, PNC, Oppenheimer, SEI, CNR, and Wilmington, that have given up the Prime "ghost". Outside of the 16 largest money fund managers, almost all of those ranked 17 through 64 appear to be "going government." Since Fidelity Cash Reserves converted into Fidelity Government Cash Reserves in Nov. 2015, Prime MMFs have seen over $300 billion in Prime fund conversions to Government and another $370 billion in outflows and liquidations. In the coming days, overall outflows should approach the 50% level as total Prime assets (currently at $‚Äč790 billion) drop below $750 billion (they had been $1.5 trillion late last year).

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Crane Data's latest Money Fund Market Share rankings show slight asset increases for a majority of U.S. money fund complexes in August as money market fund assets grew $18.4 billion, or 0.7%. Overall assets continue to be relatively flat, rising by $15.1 billion, or 0.6%, over the past 3 months, but over the past 12 months through August 31, they are up $54.3 billion, or 2.1%. The biggest gainer in August was again JP Morgan, whose MMFs rose by $10.2 billion, or 4.4%. Morgan Stanley, First American, Vanguard, Wells Fargo and Fidelity also saw assets increase, rising by $6.9 billion, $4.1 billion, $3.2 billion, $3.2 billion, and $2.7 billion, respectively. AB (Alliance) also jumped $7.0 billion due to the addition of its AB Govt MM Fund to our listings. (Our domestic U.S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product, and the combined "Family & Global Rankings" are available to Money Fund Wisdom subscribers.) We review these below, and we also look at money fund yields the past month, which were flat to mixed.

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