MMF Assets Rise Again on Week
ICI released its latest "Money Market Fund Assets" report, which showed money fund assets increasing for the 5th week out of the past 6. It says, "Total money market fund assets increased by $6.52 billion to $2.59 trillion for the week ended Wednesday, September 10, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) increased by $6.14 billion and prime funds increased by $1.53 billion. Tax-exempt money market funds decreased by $1.15 billion." The release continues, "Assets of retail money market funds decreased by $470 million to $902.53 billion. Among retail funds, Treasury money market fund assets decreased by $160 million to $200.65 billion, prime money market fund assets increased by $320 million to $515.62 billion, and tax-exempt fund assets decreased by $630 million to $186.25 billion. Assets of institutional money market funds increased by $6.99 billion to $1.69 trillion. Among institutional funds, Treasury money market fund assets increased by $6.30 billion to $727.04 billion, prime money market fund assets increased by $1.21 billion to $892.00 billion, and tax-exempt fund assets decreased by $520 million to $71.32 billion." Also, American Banker published an opinion piece, "A Simple Fix for the Repo Market" by Scott Hein and Drew Winters. "The most recent financial crisis exposed significant problems with the repurchase agreement market. Unfortunately, policymakers are now gravitating toward a roundabout solution when there is a better, simpler alternative.... To improve the stability of the market, policymakers such as Federal Reserve Bank of Boston president Eric Rosengren have proposed raising capital requirements for companies that own broker-dealers. In theory, holding more capital would make broker-dealers less likely to fall into financial distress. They would therefore be able to maintain access to funding in the repo market." They continue, "An alternative solution exists that would be both less costly and easier to implement. Broker-dealers should be required to provide collateral that any lender would be willing to take, such as Treasury securities.... Rather than use higher capital requirements as an indirect solution to instability in the repo markets, it is far better to address the problem head-on. Low-quality credit securities were at the center of the last financial crisis. Returning to traditional money market securities is the surest way to prevent a reoccurrence." Finally, in the latest of a series of articles on money fund reform, the National Law Review published a piece called "New Money Market Fund Rules Require Review by Retirement Plan Sponsors." The article was written by attorneys from McDermott Will & Emery.
