CFO Magazine writes "Protect Money Funds, Hurt Commercial Paper?" The article says, "Securities and Exchange Commission proposals to ease the risk of investing in money-market mutual funds could also make it harder for companies to raise capital by issuing commercial paper, some treasurers fear.... Aiming to reduce the risk of runs on the funds and increase their resilience to economic stresses, the SEC in June proposed prohibiting money-market mutual funds from investing in so-called 'second-tier' securities. That means companies that issue second-tier commercial paper would lose a key source of investment in the instruments. (Such companies include FedEx, Kraft, Kroger, and Safeway, according to the Association for Finance Professionals.) Currently, most money funds can invest up to 5% of their assets in second-tier securities." The piece adds, "According to the AFP's 2009 Liquidity Survey, which came out last week, AFP members are allocating 32% of their cash balances to money-market funds -- the highest percentage in the four years the organization has been collecting the data. Those investments are almost evenly split between pure Treasury funds (16.1%) and diversified funds (15.7%)." In other news, see Kiplinger's "Financial Reform: What to Expect", which quotes fund expert Mercer Bullard on the question, "Do money-market funds need to be made over?"

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