The September issue of Crane Data's Money Fund Intelligence was sent to subscribers yesterday. The latest issue of our flagship monthly newsletter features the articles: "MFI Subscribers Oppose Float, Fear Reg Changes," which reviews the results of our recent MFI Survey on the SEC's MMF Reform Proposals; "European Union Proposes 3% Buffer for CNAV MMFs," which discusses the recent EU regulatory proposal for European money funds; and, "Battle Shifts to Muni MMFs as Funds Brace for Floating," which cites a recent webinar and SEC meeting arguing to exempt Tax Exempt money funds from the floating NAV requirement. We've also updated our Money Fund Wisdom database query system with August 31, 2013, performance statistics and rankings, and our MFI XLS was also sent out Monday morning. (MFI, MFI XLS and our Crane Index products are available to subscribers at our Content center.) Our August 31 Money Fund Portfolio Holdings are scheduled to go out Wednesday, Sept. 11.
Our MFI Subscriber Survey piece says, "Crane Data recently surveyed MFI subscribers about the SEC's latest Money Market Fund Reform Proposals and some other issues. As expected, the responses indicate that the vast majority oppose the floating NAV option for prime institutional funds and most believe the stable NAV is a crucial element to MMFs. MFI e-mailed the brief survey questions to its over 1,100 recipients and received 62 responses. Respondents included primarily money fund managers and sales professionals, but also a number of money fund investors, money fund service providers, and others."
The September issue's lead story tells us, "Crane Data's 2013 Money Fund Intelligence Subscriber Survey: SEC MMF Reform Proposal and Major Issues first asked readers to tell us which of the SEC's three reform options (floating NAV, gates or combination) is the best alternative. Our respondents replied: a. Floating net asset values for Prime Institutional MMFs (11.3%, 7 responses). b. Emergency liquidity fees and "gates" for MMFs (30.6%, 19). c. A combination of floating NAVs and fees/gates for MMFs (3.2%, 2). d. Neither option, only additional disclosures (50.0%, 31). e. Other, please specify (12.9%, 8). The "Other" responses included several for "gates only" and one for "capital buffer"."
Our story on the European Union's recent shocking proposal comments, "The European Union issued a release on "shadow banking" and proposed rules on money market funds last week, which include a controversial 3% "NAV buffer" mandate for Constant NAV funds. The "proposed new rules for money market funds [aim] to ensure that MMFs can better withstand redemption pressure in stressed market conditions by enhancing their liquidity profile and stability," says the EU release. Reaction to the proposal to-date has been almost uniformly negative, but thankfully for fund providers and investors the legislative process in Europe could take years and may involve revisions or a significant compromise."
The piece cites the EU's Q&A on MMFs, which asks, "How would the new rules work?" It answers, "The proposed Regulation requires: certain levels of daily/weekly liquidity in order for the MMF to be able to satisfy investor redemptions (MMFs are obliged to hold at least 10% of their assets in instruments that mature on a daily basis and an additional 20% of assets that mature within a week); clear labeling on whether the fund is short-term MMF or a standard one (short term MMFs hold assets with a residual maturity not exceeding 397 days while the corresponding maturity limit for standard MMFs is 2 years); a capital cushion (the 3% buffer) for constant NAV funds that can be activated to support stable redemptions in times of decreasing value of the MMFs' investment assets; customer profiling policies to help anticipate large redemptions; some internal credit risk assessment by the MMF manager to avoid overreliance on external ratings."
The article on Battle Shifts to Muni MMFs as Funds Brace for Floating explains, "In what could be a preview of some comment letters, recent lobbying appears to be focusing on exempting tax-exempt money funds from the floating NAV mandate. In late August, the GFOA, ICI, and Chamber of Commerce hosted a webinar entitled, "Money Market Fund Regulation: The Impact on Municipal Finance," which discussed the potential and myriad impacts of the SEC's proposed changes on municipal investors and issuers." See the latest issue and future "News" postings for more details, or contact us to request the latest issue.
Finally, we also reminded subscribers of the upcoming Crane's European Money Fund Symposium, which will take place in two weeks (Sept. 24-25) at The Conrad Hotel in Dublin, Ireland. We currently have 75 attendees registered, and we're expecting close to 100 in total. This should make our inaugural event the largest money fund conference outside the U.S. (We already of course hold the title of largest U.S. event with our annual Money Fund Symposium, which attracted 450 in Baltimore this past June.)
