The March issue of Crane Data's Money Fund Intelligence newsletter, which was e-mailed to subscribers this morning, features the articles: "Update on MMF Reforms: Will the SEC Wait for FSOC?," which talks about (still) pending regulatory proposals; "HSBC's Jonathan Curry Talks Global Liquidity," which profiles one of the largest managers of European money funds; and, "Money Fund Assets: Recent Trends & Primer," which discusses asset flows and differences in data series. We've also updated our Money Fund Wisdom database query system with Feb. 28, 2013, performance statistics and rankings, and our MFI XLS will be sent out shortly. Our Feb. 28 Money Fund Portfolio Holdings are scheduled to go out on Monday, March 11. Note that we've also released the agenda for Crane's Money Fund Symposium, which will be held June 19-21, 2013, in Baltimore, Md. Registrations ($750) and hotel reservations are now being accepted via the website at www.moneyfundsymposium.com.
Our piece on MMF Reforms says, "Money fund providers, suppliers and investors are bracing for a possible reform proposal, but it's unclear whether it will be issued by the SEC or by the FSOC, or both. It's also unclear when we might see a proposal, and there remains the distinct possibility that the stalemate continues indefinitely. Here's what we know now. The comment period for the Financial Stability Oversight Council's "Proposed Recommendations Regarding Money Market Fund Reform" ended on February 15, and the letters (again) overwhelmingly opposed a floating NAV, capital buffer and minimum balance at risk."
MFI also writes in its monthly "profile," "This month, MFI interviews Jonathan Curry, Global CIO for Liquidity, at HSBC Global Asset Management. The London-based Curry is also the current Chairman of the Institutional Money Market Funds Association (IMMFA), which represents AAA-rated money funds regulated in Europe. HSBC Global Asset Management manages approximately $65 billion in money fund assets globally in 12 different currencies. Below, we discuss European, U.S. and global regulatory and investment issues impacting money market funds."
Our article on Assets explains, "Money fund assets have been on a rollercoaster ride since last October. They rose slightly in the latest week after falling for six straight weeks. This follows as huge spike in November and December 2012. Here we discuss the recent asset trends, and we review some basics about various asset totals and series."
In other news, the Federal Reserve Bank of New York published a Liberty Street Economics Blog piece entitled, "Pick Your Poison: How Money Market Funds Reacted to Financial Stress in 2011" which was written by Neel Krishnan, Antoine Martin, and Asani Sarkar. The piece says, "The summer of 2011 was an unsettling period for financial markets. In the United States, Congress was unable to agree to terms for raising the debt ceiling until August, creating considerable uncertainty over whether the government would be forced to default on its debt. In Europe, the borrowing costs of some peripheral countries increased dramatically, raising questions about the health of some of the largest banks. In this post, we analyze data recently made public by the Securities and Exchange Commission (SEC) to see how the U.S. money market mutual fund (MMF) industry reacted to these stresses. We conclude that MMFs appeared to be more concerned with the European debt crisis because they increased their holdings of U.S. Treasuries and other government securities while decreasing their holdings of financial securities issued by European banks over that period."
The brief adds, "The dog days of summer 2011 were worrisome for investors, who faced a variety of risks. With a limited number of investment options, money funds had to choose among the least unpleasant of many risky options. Data recently made public by the SEC suggest that money funds considered the European crisis to represent a greater risk than the U.S. debt-ceiling crisis, as they moved away from European assets and increased their investments in U.S. Treasury securities and related assets. The relatively benign effects of the 2011 U.S. debt-ceiling crisis on U.S. financial markets appear to have been serendipitous, as the U.S. and European debt crises occurred concurrently. Money funds nevertheless reacted to the increased riskiness of Treasuries by dramatically decreasing the maturities of Treasuries held in their portfolios during the debt-ceiling crisis. This behavior suggests that we can't be sure that the effects of future fiscal crises on financial markets will be similarly benign."
