Today's Wall Street Journal Fund Track column writes "Money Funds Exhale After SEC Rules; Should They?. The article says, "Some big players in the $3.3 trillion money-market fund industry are breathing sighs of relief after regulators amended the rules governing the funds. There's a chance that relief may prove premature: The Securities and Exchange Commission, in making the changes last week, said it is still assessing the need for more fundamental reforms."
Reporter Daisy Maxey continues, "Federated Investors, which manages $313.3 billion in money-market assets, welcomed the enacted changes 'not so much for what was done, but for what wasn't done.' It was pleased that the SEC opted to retain $1 net-asset-value pricing, rather than establishing a regime where $1 invested could fall below that value, said Debbie Cunningham, chief investment officer at Federated, in a statement on the firm's Web site."
The Journal piece summarizes the rules, then says, "While some in the industry aren't happy with some of the restrictions, in general 'money funds aren't all that upset one way or another,' said Peter Crane, president of Crane Data LLC."
They continue, "Federated doesn't believe that requiring money funds to regularly disclose the underlying value of their assets per share on a delayed basis will undermine the way funds currently operate using net asset value, Ms. Cunningham said.... Overall, the changes may lower money fund yields 'a couple of basis points,' or hundredths of a percentage point, she said. Much of the industry, including Federated, has already been trending toward such changes, so much of the change is already reflected in funds' yields, she said."
The WSJ also says, "Vanguard Group, which manages about $180 billion in money-market fund assets, believes the SEC struck a balance between investor protection and the efficient management of money-market funds, a spokesman said.... The rule change won't fundamentally affect Vanguard's approach, the spokesman said."
But, the Journal continues, "In announcing approval of the amendments, SEC Chairman Mary Schapiro said they're only a first step. The SEC will continue to pursue more fundamental changes, including a floating NAV; real-time disclosure of shadow NAV; and a private liquidity facility to provide liquidity to money-market funds in times of stress among other options, she said."
They conclude, "That's worrisome for some in the industry." They quote Crane, "It's like, 'You mean we're not done?' ... Still, he expects that a floating-rate NAV, capital requirements or a liquidity exchange bank for money funds are unlikely to be required." Crane tells the Journal, "The benefits of a floating-rate NAV have not been shown."
