Below, we excerpt from the recent money fund "profile" in the June issue of our MFI newsletter, a piece entitled, "British Portal Invasion: MyTreasury's Meadows." MFI writes: This month's Money Fund Intelligence interviews Justin Meadows, CEO of the U.K.-based online money market fund trading "portal" MyTreasury. The company recently entered the U.S. market, and hired money fund veteran Paul Rice as Managing Director, Americas. We discuss the portal's history, recent initiatives and other major money fund issues in Europe and the U.S. with Meadows below.
MFI: Tell us about your history. Meadows: MyTreasury actually started off as a project funded by the European Commission back in 2004.... What we did was put together a project with quite a few European [corporate] treasury departments, funds, banks, and software providers. We did two years of initial research, and during the course of that we actually got over 200 corporate treasuries in various European organizations involved in the testing and validation of what we produced. That was through our contact with the European Association of Corporate Treasurers.... Having over 200 involved is why we believe we've ended up with something that actually works for treasurers, because it was largely designed and tested by them.
The project really focused on money market funds, time deposits and commercial paper, but funds were always at the forefront of that. When we completed the research we got a few strong messages back.... One was they wanted a direct trading platform, fully disclosed, not the omnibus trading platform which wasn't strongly supported at all.... [I]nvestors didn't want to be dis-intermediated in their relationships with the banks and the funds either, so that was a key thing. Another thing when they were looking for complete automation; they didn't want something that involved manual interference.... The other thing [was that to] get this off the ground we needed to find a strong partner to link with who had credibility in the market.
We ended up with ICAP largely because of the feedback that we'd been given. First of all, ICAP is the world's largest interdealer broker, so it has relationships, globally, with the all the banks and funds. So, we wouldn't start from scratch in that respect.... We thought funds and banks could be well delivered by ICAP and that has proved to be the case.... We have been given the space and the resources to build it.... We've got all the support and all the benefit of having a major player in the market and somebody with all the technical skills that we need to deliver the platform and the integration needed for automation.
MFI: Was it originally just European-domiciled funds? Meadows: Yes, it was. We started up as a European money market, or actually just "offshore" money market fund portal, for European corporate treasurers. When we did our first trade we had two investors and two money market funds on the platform. Now, in the offshore space, we have ... all the IMMFA funds, and we have quite a few others as well. In the U.S. space, we either already have or we are just finishing up turning live those major funds families that account for about 92% of institutional assets.
MFI: When did you guys enter the U.S.? Meadows: We are really only entering with trading now.... It's been a very slow process.... We are different from most portals which operate under seller and dealer agreements, or distribution agreements. We operate under a license agreement, and we regard ourselves as technology providers, not distributors, because we have this direct model. We don't open accounts on behalf of anybody. We don't take delegated trading authority on behalf on anybody. We're not signatures on accounts. So with this in mind, we just simply facilitate a complete view of the market and the secure execution of transactions.... It helped that we are cheap, if I can use that term. All our fees are based on wide distribution to a large number of clients, high volume low cost, and full automation. We got there in the end.
MFI: Can you talk about the size of the portal? Meadows: We service about $70 billion on the platform.... That is almost all money market funds at the moment, but time deposit and CD trading is beginning to build. There was about $500 billion traded through the platform last year. We have almost 500 share classes in about 250 different funds at the moment.... It is fairly evenly divided [between currencies]. To be honest our Euro assets have kept up despite what has been going on over there. Dollar is probably our fastest growing, partly of course because we are coming into the US now. But before when we were just offshore, it started with almost all GBP and then Euro started growing quite significantly.... At the moment, our initial US clients are bringing just under $10 billion on board, but it is growing quite quickly. The rest is Dublin and Luxemburg.
