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Crane Data is preparing to host its fourth annual Money Fund University conference, which will be held at The Renaissance Hotel in Providence, R.I., January 23-24, 2014. This year's event will focus heavily on regulations and the pending Money Market Fund Reform Proposals, featuring a faculty of the money fund industry's top lawyers and former regulators. Money Fund University offers attendees an affordable ($500) and comprehensive one and a half day, "basic training" course on money market mutual funds, educating attendees on the basics and history of money funds, the Fed, interest rates, ratings, rankings, money market instruments such as commercial paper, CDs and repo, plus portfolio construction and credit analysis. At our Providence event, we will take a deep dive into Rule 2a-7 and current and potential future money fund regulations, with a full half-day and four sessions on the topic.
The morning of Day One of the 2014 MFU agenda includes: History & Current State of Money Market Mutual Funds with Peter Crane, President & Publisher, Crane Data and Sean Collins, Senior Economist, Investment Company Institute; The Federal Reserve & Money Markets with Joseph Abate, Director F-I Strategy, Barclays Capital and Brian Smedley, U.S. Rates, Bank of America Merrill Lynch; Interest Rate Basics & Money Fund Math with Phil Giles, Adjunct Professor, Columbia University; and, Ratings, Monitoring & Performance with Ian Rasmussen, Senior Director, Fitch Ratings and Joel Friedman, Senior Director, Standard & Poor's.
Day One's afternoon agenda includes: Instruments of the Money Markets Intro with Alex Roever, Managing Director, J.P. Morgan Securities; Repurchase Agreements with Teresa Ho, J.P. Morgan Securities; Treasuries & Govt Agencies with Sue Hill, Senior Portfolio Manager, Federated Investors and Michael Duke, V.P., G.X. Clarke & Co.; Commercial Paper & ABCP with Garret Sloan, F-I Strategist, Wells Fargo Securities; CDs, TDs & Bank Debt with Ted Byrne, Money Market Specialist, J.M. Lummis & Co.; Instruments of the Money Markets: Tax-Exempt Securities, VRDNs, TOBs & Muni Bonds with Colleen Meehan, Senior PM, and Rebecca Glen, Senior Research Analyst, The Dreyfus Corp.; and, Credit Analysis & Portfolio Management with Adam Ackerman, VP & Portfolio Manager, J.P. Morgan Asset Management.
Day Two's agenda includes: Money Fund Regulations: 2a-7 Basics & History with John Hunt, Partner, Nutter, McClennan & Fish LLP and Joan Swirsky, Of Counsel, Stradley Ronon; Regulations II: Recent & Future Rule Changes with Stephen Keen, Partner, Reed Smith and Jack Murphy, Partner, Dechert LLP; Regulations III: Hot Topics in MF Regulation, with Robert Plaze, Partner, Stoock, Stroock & Lavan LLP; and New Disclosure Requirements & MMF Data, with Peter Crane and John Hunt.
New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing should benefit from our comprehensive program. Even experienced professionals may enjoy a refresher course and the opportunity to interact with peers in an informal setting. Attendee registration for Crane's Money Fund University is just $500, exhibit space is $2,000, and sponsorship opportunities are $3K, $4K, and $5K. A block of rooms has been reserved at the Renaissance Providence Downtown. The conference negotiated rate of $159 plus tax is available through December 20th.
We'd like to thank our MFU sponsors -- G.X. Clarke & Co., Fitch Ratings, Dreyfus/BNY Mellon CIS, J.P. Morgan Asset Management, Invesco, Investortools, and Standard & Poor's -- for their support, and we look forward to seeing you in Providence in January. E-mail Pete for the latest brochure or visit www.moneyfunduniversity.com to register or for more details.
Crane Data is also preparing to publish the preliminary agenda and is already accepting registrations for its big show, Money Fund Symposium, which will be held June 23-25, 2014, at the Renaissance Boston Waterfront in Boston, Mass. (See www.moneyfundsymposium.com for details.) Finally, we're also making preparations for our 2nd European Money Fund Symposium; our "offshore" money fund event is tentatively scheduled for London on Sept. 23-24, 2014. Let us know if you'd like more information on any of our upcoming conferences, and watch for more information in coming weeks.
The July issue of Crane Data's Money Fund Intelligence newsletter was posted on our website and e-mailed to subscribers this morning. It features the articles: "SEC on Reform Proposals; Comments Due by 9/17," which reviews the SEC's Sarah ten Siethoff's recent comments on proposed regulations; "ICI's Stevens Keynotes Symposium: Blasts Floating," which excerpts from Paul Stevens' recent speech in Baltimore; and, "Treasury's Rutherford on Reforms, FRNs, Stability," which quotes from the Assistant Secretary's Money Fund Symposium appearance. We've also updated our Money Fund Wisdom database query system with June 30, 2013, performance statistics and rankings, and our MFI XLS will also be sent out Monday a.m. (It is already available at our Content center too, along with the recordings and Powerpoints from our Baltimore Money Fund Symposium.) Our June 30 Money Fund Portfolio Holdings are scheduled to go out Wednesday, July 10.
Our SEC on Reform piece says, "The Securities & Exchange Commission proposed new reforms to money market mutual fund regulations last month, including the option of either a floating NAV for prime institutional funds or a liquidity fee and gates regime, plus a series of additional disclosures and tweaks The Proposed "Money Market Fund Reform" was officially published in the Federal Register on June 19, and interested parties have until Sept. 17 to submit comments. (See http://www.sec.gov/rules/proposed.shtml for the full 198-page proposal and to comment. No comments of substance have been submitted as of yet.)"
The July issue's lead story adds, "SEC Special Counsel Sarah ten Siethoff, who participated in the "Regulatory Roundtable" at our Money Fund Symposium (with Federated's John McGonigle and Dechert's Jack Murphy), commented in Baltimore, "We tried to be very clear on this proposal, from literally the first page of it and all the way through, on what the goals were for this rulemaking. [W]e were seeking to preserve, as much as possible, the benefits of money market funds, while lessening the susceptibility [to] redemptions, reducing contagion effects and increasing transparency of their risks.... What we were seeking to do is to try to find the best way to make that balance."
MFI excerpts from the Stevens keynote for its monthly "profile," writing, "Investment Company Institute President & CEO Paul Stevens delivered the opening keynote to the 5th annual Crane's Money Fund Symposium in Baltimore (which ran June 19-21). His speech, entitled, "Top of the Ninth? The State of Play for Money Market Funds," states, "From the start, ICI and the fund industry have consistently supported measures designed to make money market funds more resilient, subject to two conditions. First, we must preserve the key features of money market funds that make them so valuable for investors and issuers. Second, we must preserve choice for investors by ensuring a robust and competitive global money market fund industry.""
The article on Treasury's Rutherford explains, "The U.S. Treasury's Matt Rutherford also spoke at our recent Money Fund Symposium and discussed financial stability, reforms, and the likely introduction of floating rate notes later this year. We excerpt from his comments below. He told us, "As others have pointed out, intermediaries in the money markets often conduct maturity, liquidity, and credit transformation without access to central bank liquidity, deposit insurance and prudential regulation, and leading up to the financial crisis the role of these intermediaries ... increased greatly. The subsequent disruptions in specific markets revealed structural weaknesses in some of these intermediaries, including ABCP conduits, SIVs, securities lenders and money market mutual funds. Now this is territory that has been covered by policymakers and academics. [B]ut today I just want to focus my discussion more narrowly on Treasury's interest within money markets, and this includes our rule as an issuer, as well as our ongoing support to make private money markets more resilient, in particular through money market mutual fund reform as well as tri-party repo reform."
See the latest issue and future "News" postings for more details, or contact us to request the latest issue.
Below, we excerpt from the recent money fund "profile" in the June issue of our MFI newsletter, a piece entitled, "British Portal Invasion: MyTreasury's Meadows." MFI writes: This month's Money Fund Intelligence interviews Justin Meadows, CEO of the U.K.-based online money market fund trading "portal" MyTreasury. The company recently entered the U.S. market, and hired money fund veteran Paul Rice as Managing Director, Americas. We discuss the portal's history, recent initiatives and other major money fund issues in Europe and the U.S. with Meadows below.
MFI: Tell us about your history. Meadows: MyTreasury actually started off as a project funded by the European Commission back in 2004.... What we did was put together a project with quite a few European [corporate] treasury departments, funds, banks, and software providers. We did two years of initial research, and during the course of that we actually got over 200 corporate treasuries in various European organizations involved in the testing and validation of what we produced. That was through our contact with the European Association of Corporate Treasurers.... Having over 200 involved is why we believe we've ended up with something that actually works for treasurers, because it was largely designed and tested by them.
The project really focused on money market funds, time deposits and commercial paper, but funds were always at the forefront of that. When we completed the research we got a few strong messages back.... One was they wanted a direct trading platform, fully disclosed, not the omnibus trading platform which wasn't strongly supported at all.... [I]nvestors didn't want to be dis-intermediated in their relationships with the banks and the funds either, so that was a key thing. Another thing when they were looking for complete automation; they didn't want something that involved manual interference.... The other thing [was that to] get this off the ground we needed to find a strong partner to link with who had credibility in the market.
We ended up with ICAP largely because of the feedback that we'd been given. First of all, ICAP is the world's largest interdealer broker, so it has relationships, globally, with the all the banks and funds. So, we wouldn't start from scratch in that respect.... We thought funds and banks could be well delivered by ICAP and that has proved to be the case.... We have been given the space and the resources to build it.... We've got all the support and all the benefit of having a major player in the market and somebody with all the technical skills that we need to deliver the platform and the integration needed for automation.
MFI: Was it originally just European-domiciled funds? Meadows: Yes, it was. We started up as a European money market, or actually just "offshore" money market fund portal, for European corporate treasurers. When we did our first trade we had two investors and two money market funds on the platform. Now, in the offshore space, we have ... all the IMMFA funds, and we have quite a few others as well. In the U.S. space, we either already have or we are just finishing up turning live those major funds families that account for about 92% of institutional assets.
MFI: When did you guys enter the U.S.? Meadows: We are really only entering with trading now.... It's been a very slow process.... We are different from most portals which operate under seller and dealer agreements, or distribution agreements. We operate under a license agreement, and we regard ourselves as technology providers, not distributors, because we have this direct model. We don't open accounts on behalf of anybody. We don't take delegated trading authority on behalf on anybody. We're not signatures on accounts. So with this in mind, we just simply facilitate a complete view of the market and the secure execution of transactions.... It helped that we are cheap, if I can use that term. All our fees are based on wide distribution to a large number of clients, high volume low cost, and full automation. We got there in the end.
MFI: Can you talk about the size of the portal? Meadows: We service about $70 billion on the platform.... That is almost all money market funds at the moment, but time deposit and CD trading is beginning to build. There was about $500 billion traded through the platform last year. We have almost 500 share classes in about 250 different funds at the moment.... It is fairly evenly divided [between currencies]. To be honest our Euro assets have kept up despite what has been going on over there. Dollar is probably our fastest growing, partly of course because we are coming into the US now. But before when we were just offshore, it started with almost all GBP and then Euro started growing quite significantly.... At the moment, our initial US clients are bringing just under $10 billion on board, but it is growing quite quickly. The rest is Dublin and Luxemburg.
The June issue of Crane Data's Money Fund Intelligence newsletter was e-mailed to subscribers Friday morning. It features the articles: "SEC Issues MMF Reform Proposal; Is Floating Out?," which talks about the recently-issued 700-page proposed regulations; "British Portal Invasion: MyTreasury's Meadows," which interviews ICAP's Justin Meadows; and, "Ultra-Short Space Getting Uncomfortably Warm," which excerpts from recent articles on activity in the enhanced cash and the space beyond money funds. We've also updated our Money Fund Wisdom database query system with May 31, 2013, performance statistics and rankings, and our MFI XLS was also sent out Friday a.m. Our May 31 Money Fund Portfolio Holdings are scheduled to go out tomorrow, June 11. Note that we're also making final preparations for next week's Crane's Money Fund Symposium, which will be held June 19-21, 2013, in Baltimore, Md. Registrations ($750). We hope to see many of you in Baltimore!
Our SEC Issues piece says, "The U.S. Securities & Exchange Commission, the primary regulator of money market mutual funds, issued its long-awaited Money Market Fund Reform Proposal earlier this week following a unanimous vote to release it at an Open Meeting on Wednesday. The Commission pleasantly surprised money fund managers and investors with a downright reasonable proposal, relegating the floating NAV option to one of two alternatives and limiting it to just Prime Institutional funds. They also included an alternative option of liquidity fees plus "gates", which should gather broad support from fund providers."
MFI explains, "The SEC's Proposal says, "The Securities and Exchange Commission is proposing two alternatives for amending rules that govern money market mutual funds under the Investment Company Act of 1940. The two alternatives are designed to address money market funds' susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks, while preserving, as much as possible, the benefits of money market funds. The first alternative proposal would require money market funds to sell and redeem shares based on the current market based value of the securities in their underlying portfolios, rounded to the fourth decimal place (e.g., $1.0000), i.e., transact at a "floating" net asset value per share ("NAV"). The second alternative proposal would require money market funds to impose a liquidity fee (unless the fund's board determines that it is not in the best interest of the fund) if a fund's liquidity levels fell below a specified threshold and would permit the funds to suspend redemptions temporarily, i.e., to "gate" the fund under the same circumstances. Under this proposal, we could adopt either alternative by itself or a combination of the two alternatives."
MFI writes in its monthly "profile," "This month's Money Fund Intelligence interviews Justin Meadows, CEO of the U.K.-based online money market fund trading "portal" MyTreasury. The company recently entered the U.S. market, and hired money fund veteran Paul Rice as Managing Director, Americas. We discuss the portal's history, recent initiatives and other major money fund issues in Europe and the U.S. with Meadows below."
The article on Ultra-Short Bond Funds explains, "The sectors just beyond money market funds, enhanced cash and ultra-short bond funds, are once again seeing a resurgence eerily familiar to 1993 and 2004. When a number of mutual fund companies launch similar products, it's time to get a little nervous. Ultra-short bond funds have been in the news a little too much lately." See the latest issue and future excerpts for more, or contact us to request the latest issue.