Another Prime Institutional money market fund filed to liquidate Friday, bringing the total of MMF portfolios liquidating or "going Government" to 6 to date. A Prospectus Supplement filing for the $6.6 billion Dreyfus Cash Management Fund, including its Admin (DACXX), Institutional (DICXX), Investor (DVCXX) and Preferred (DCEXX) Shares, explains, "The Board of Trustees of Dreyfus Cash Management (the "Fund") has approved the liquidation of the Fund, effective on or about September 6, 2024. Before the Liquidation Date, and at the discretion of Fund management, the Fund's portfolio securities will be sold and/or allowed to mature in their normal course and the Fund may cease to pursue its investment objective and policies. The liquidation of the Fund may result in one or more taxable events for shareholders subject to federal income tax." The 6 Prime Institutional money funds declaring either pending conversions to Government or pending liquidations now represent $218.2 billion in assets, or 34.9% of the $624.9 billion total in Prime Inst MMFs (assets as of 4/30/24). (For more, see these Crane Data News stories: "Goldman Files to Liquidate Prime Inst MMFs; Barron's: MMFs Tempting" (4/22/24), "Federated Liquidating Money Mkt Trust" (4/1/24), "Vanguard Market Liquidity Fund Files to Go Government, Joins American" (3/20/24) and "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees" (2/6/24).)
The filing explains, "Accordingly, effective on or about June 14, 2024, the Fund will be closed to any investments for new accounts, except that new accounts may be established for 'sweep accounts' and by participants in group retirement plans if the Fund is established as an investment option under the plans before the Closing Date. The Fund will continue to accept subsequent investments until the Liquidation Date."
It adds, "Fund shares held on the Liquidation Date in Individual Retirement Accounts and retirement plans sponsored by BNY Mellon Investment Adviser, Inc. or its affiliates, if any, will be exchanged for Wealth shares of Dreyfus Government Cash Management ("DGCM"). Investors may obtain a copy of the Prospectus of DGCM by calling 1-800-373-9387."
Dreyfus also filed to liquidate its $586 million Dreyfus Tax-Exempt Cash Mgmt Ins (DEIXX). They write, "The Board of Trustees of Dreyfus Tax Exempt Cash Management Funds has approved the liquidation of Dreyfus Tax Exempt Cash Management, a series of the Trust, effective on or about September 6, 2024. Before the Liquidation Date, and at the discretion of Fund management, the Fund's portfolio securities will be sold and/or allowed to mature in their normal course and the Fund may cease to pursue its investment objective and policies. The liquidation of the Fund may result in one or more taxable events for shareholders subject to federal income tax."
The filing adds, "Accordingly, effective on or about June 14, 2024, the Fund will be closed to any investments for new accounts, except that new accounts may be established for 'sweep accounts' and by participants in group retirement plans if the Fund is established as an investment option under the plans before the Closing Date. The Fund will continue to accept subsequent investments until the Liquidation Date." The Tax Exempt Institutional Money Fund sector is tiny, containing just 12 funds with $14.5 billion in assets.
Though we haven't found the official filing or news, we also noticed that internal money fund Fidelity Money Market Central Fund (FID03) no longer has any portfolio holdings or assets, so we assume it has merged or liquidated. It was $1.1 billion on March 20, but the fund hasn't reported any assets since. The $49.8 billion Prime Inst Fidelity Cash Central Fund (FID01) remains undeclared to date. If we count this fund, it brings the total to 7 of Prime Inst MMF portfolios planning to exit.
Separately, a Prospectus Supplement for the AB Government Money Market Portfolio (unrelated to the Prime shifts) explains, "AllianceBernstein L.P. recently notified the Portfolio that it intends to discontinue a contractual agreement with AB Fixed-Income Shares, Inc., on behalf of the Portfolio, to waive 0.05% of the Portfolio's Management Fee upon the expiration of the current term of the agreement on August 31, 2024. Accordingly, effective September 1, 2024, the Portfolio will pay the Adviser 0.20% of average daily net assets for investment advisory services."
In other news, the U.S. Treasury's Financial Stability Oversight Council (FSOC) met Friday and released the minutes from its previous meeting. The Feb. 23 Minutes say, "Chair Gensler stated that the SEC had adopted a rule regarding money market funds in July 2023, with a compliance date of April 2024. He also stated that the SEC had proposed rules in November 2022 regarding liquidity and risk management at open-end funds. He noted that over $6 trillion is also held in collective investment trusts."
The FSOC minutes tell us, "Chair Gensler noted that with respect to private funds, the SEC and the CFTC had finalized a joint rule on hedge fund reporting in February 2024, and that the SEC had also issued rules regarding reporting requirements for private fund advisors in May 2023. Chair Gensler then described rules the SEC had adopted in November 2023 regarding clearing agency governance. He also noted that under rules adopted by the SEC in February 2023, the securities settlement cycle would be shortened to T+1 for trades occurring on or after May 28, 2024 in stocks, bonds, exchange-traded funds, and certain other instruments."
Discussing the "OFR's collection of data on bilateral repo <b:>`_," Sriram Rajan of the OFR comments, "[T]he OFR had presented to the Council on non-centrally cleared bilateral repurchase agreements (NCCBR) in July 2022. He stated that at that time, the OFR had been conducting outreach regarding a data collection pilot on this market, which he noted is an important source of secured financing for financial institutions. He stated that the OFR's pilot study had informed the OFR about collateral, counterparties, pricing terms, market size, and other market characteristics in this market."
The minutes explain, "He stated that the OFR had subsequently issued a proposed rulemaking in January 2023 to establish an ongoing collection regarding NCCBR transactions. He stated that the proposed rule was designed to fill a data gap in the short-term funding market. He stated that the proposed rule would require daily, transaction-level reporting from financial companies. He noted that companies required to report under the proposed rule would be those with average daily outstanding commitments to borrow cash and extend guarantees during the prior calendar quarter of at least $10 billion. He noted that the most recent estimates were that as proposed, the NCCBR collection initially would capture reporting on over $2 trillion in daily transaction volume through approximately 40 companies."
Finally, they add, "He stated that the OFR had received over 30 public comments on the proposed rule. He stated that commenters had supported the objectives of the proposed collection. He noted that the OFR was considering certain issues raised by the comment letters. He noted that the SEC had published a final rule regarding central clearing in Treasury markets in December 2023, and that the SEC's rule would require the clearing of repo transactions on Treasury collateral. He noted that upon implementation in June 2026, the SEC's rule may reduce the NCCBR collection's coverage and volume. He noted, however, that the OFR's collection remained critical, including because it would provide regulators with market data prior to the implementation of the SEC's rule and would provide transparency on the migration of trading to central clearing, and on transactions in the NCCBR market following implementation of the SEC's rule. He concluded by noting that the OFR expects to publish its final rule in the spring of 2024." (See Crane Data's May 8 Link of the Day, "OFR Adopts Rule on Repo Reporting.)
