"Money Funds Welcome Repo Shift"
The Wall Street Journal writes "Money Funds Welcome Repo Shift". It says, "The New York Federal Reserve has at least three -- and probably many more --willing potential partners as it plans to expand the tools used to control liquidity in financial markets. Vanguard Group, Fidelity Investments and Federated Investors on Monday welcomed the New York Fed's announcement that it will expand the counterparties, starting with money funds, with which it conducts reverse-repurchase agreements." The Journal quotes Vanguard Group's David Glocke, "We would enthusiastically want to take a look at these transactions for our portfolios. It's a great alternative to other transactions that we already do." The piece continues, "Money-market funds applying to act as counterparties must have net assets of no less than $20 billion for six consecutive months, have been in existence for at least one year and be a consistent investor in the tri-party repo markets, according to the New York Fed's eligibility criteria.... Others in the $3.1 trillion money-fund industry are likely to be cheered by the prospect of deals with a party as trusted as the Fed. The supply of safe assets in which money-market funds can invest has dwindled during the financial downturn, and plans for tighter rules on just how money-market funds can invest are likely to make liquid assets even more scarce. Access to the 'reverse repos' will actually help money funds comply with the new Securities and Exchange Commission rules, said Peter Crane, president of Crane Data LLC, 'As those go into effect, there's going to be even more of a thirst for liquidity.'" See also, New York Daily News' "Government to institute new standards that may make money-market funds safer for investors".
