Daily Links Archives: April, 2013

Sunday's Financial Times writes "Brussels plan will 'kill off' money funds". It says, "Europe's E490bn fixed value money market fund industry will be "killed off" by tough reform proposals drafted by the European Commission, industry figures have said. The clampdown could also undermine the larger variable net asset value money fund sector, potentially increasing risks for investors. The leaked draft forms part of a global regulatory backlash against constant NAV money funds, which invest in high-quality, short-term money market instruments and trade at a fixed E1 or $1 a share except in extreme circumstances. Brussels argues constant NAV funds are susceptible to "massive and sudden redemption requests", which can create systemic risks given that money market funds hold 38 per cent of short-term debt issued by European banks.... The commission's draft proposals state that constant NAV funds must maintain a 3 per cent cash buffer to absorb losses, amounting to E14.7bn. All money market funds would also be barred from accepting collateral with a maturity of longer than 397 days to back repo trades. This will eliminate 80-90 per cent of the collateral currently used, say industry sources. It could potentially force funds to switch excess cash into unsecured commercial paper."

ICI economists published the Viewpoint "IMF Analysis Ignores 2010 Money Market Fund Reforms and Exaggerates Run Risk", which says, "The Securities and Exchange Commission's comprehensive 2010 reforms for money market funds are a proven success. As ICI research has shown, the reforms strengthened the funds and enhanced financial stability. Unfortunately, this success continues to be overlooked or ignored by regulators and academics who persist in raising alarm that money market funds are prone to destabilizing runs. For example, the International Monetary Fund's recent Global Financial Stability Report speculates that "another run on MMMFs [money market mutual funds] may occur if downside credit risks materialize or securities lending suddenly halts, fueling investors' fear of MMMFs 'breaking the buck' (that is, failing to maintain the expected stable net asset value)." The IMF states that "an outright run would be undesirable and could have systemic consequences if the funding that these institutions provide to banks -- directly and through overnight securities lending -- dries up." The IMF's analysis, however, displays a surprising lack of understanding of the laws governing, and institutional details surrounding, money market funds. The IMF's analysis does not once mention the SEC's 2010 reforms to money market funds. The IMF's analysis invites the reader to assume that money market funds use leverage (they do not) and that they can boost their yields by adding credit risk as desired (in fact, money market fund credit risks are highly constrained by SEC rules). The IMF suggests that money market funds engage in securities lending (they don't).... In this blog post, we fill in gaps in the IMF analysis and discuss how the application of bank-like prudential reforms to money market funds could increase risks to financial stability -- just the opposite of the IMF's claims."

Federated Investors released its latest quarterly earnings last night, saying, "Money market assets in both funds and separate accounts were $279.7 billion at March 31, 2013, up $5.0 billion or 2 percent from $274.7 billion at March 31, 2012 and down $5.0 billion or 2 percent from $284.7 billion at Dec. 31, 2012. Money market mutual fund assets were $242.7 billion at March 31, 2013, down $2.5 billion or 1 percent from $245.2 billion at March 31, 2012 and down $13.0 billion or 5 percent from $255.7 billion at Dec. 31, 2012. Revenue decreased by $2.3 million or 1 percent due primarily to an increase in voluntary fee waivers related to certain money market funds in order for these funds to maintain positive or zero net yields. The decrease was partially offset by an increase in revenue due to higher average fixed-income and equity assets.... During Q1 2013, Federated derived 56 percent of its revenue from equity and fixed-income assets (33 percent from equity assets and 23 percent from fixed-income assets), 43 percent from money market assets and 1 percent from other products and services.... Revenue decreased by $16.9 million or 7 percent primarily due to an increase in voluntary fee waivers and fewer days in the quarter, partially offset by an increase in average assets. Operating expenses decreased by $1.9 million or 1 percent. The decrease primarily reflects lower distribution expense related to the aforementioned increase in fee waivers.... Fee waivers to maintain positive or zero net yields could vary significantly in the future as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the Securities and Exchange Commission, the Financial Stability Oversight Council and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market customer assets, Federated's willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties." Watch for more coverage following the conference call Friday morning. In other news, ICI released its latest "Money Market Mutual Fund Assets," which says, "Total money market mutual fund assets decreased by $1.87 billion to $2.593 trillion for the week ended Wednesday, April 24."

We just noticed a recent "Speech by Governor Stein on liquidity regulation and central banking," which discusses Basel III's Liquidity Coverage Ratio and the Fed's lender of last resort function. Stein's speech says, "Liquidity regulation is a relatively new, post-crisis addition to the financial stability toolkit. Key elements include the Liquidity Coverage Ratio (LCR), which was recently finalized by the Basel Committee on Banking Supervision, and the Net Stable Funding Ratio, which is still a work in progress.... The stated goal of the LCR is straightforward, even if some aspects of its design are less so. In the words of the Basel Committee, "The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks. It does this by ensuring that banks have an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and immediately in private markets into cash to meet their liquidity needs for a 30 calendar day liquidity stress scenario." In other words, each bank is required to model its total outflows over 30 days in a liquidity stress event and then to hold HQLA sufficient to accommodate those outflows. This requirement is implemented with a ratio test, where modeled outflows go in the denominator and the stock of HQLA goes in the numerator; when the ratio equals or exceeds 100 percent, the requirement is satisfied.... In January of this year, the committee issued a revised final version of the LCR, following an endorsement by its governing body, the Group of Governors and Heads of Supervision (GHOS). The revision expands the range of assets that can count as HQLA and also adjusts some of the assumptions that govern the modeling of net outflows in a stress scenario. In addition, the committee agreed in January to a gradual phase-in of the LCR, so that it only becomes fully effective on an international basis in January 2019. On the domestic front, the Federal Reserve expects that the U.S. banking agencies will issue a proposal later this year to implement the LCR for large U.S. banking firms."

A release entitled, "Federated Investors, Inc. Announces First Quarter 2013 Earnings and Conference Call Dates says, "Federated Investors, Inc., one of the nation's largest investment managers, will report financial and operating results for the quarter ended March 31, 2013 after the market closes on Thursday, April 25, 2013. A conference call for investors and analysts will be held at 9 a.m. Eastern on Friday, April 26, 2013. President and Chief Executive Officer J. Christopher Donahue and Chief Financial Officer Thomas R. Donahue will host the call. Federated's Annual Shareholder Meeting will be held at 4 p.m. Eastern on Thursday, April 25, 2013 in the Pennsylvania East Room of the Westin Convention Center in Pittsburgh. Investors interested in listening to the teleconference should dial 877-407-0782 (domestic) or 201-689-8567 (international) or visit FederatedInvestors.com for real time Internet access. To listen via the Internet, go to the About Federated section of the website at least 15 minutes prior to register, download and install any necessary audio software." Also, Deborah Cunningham will host Federated's latest Quarterly Money Market Update, on Thursday, April 25, at 4:00 pm ET. The Dial-in number is: (866) 600-0804 (ID: 24885836).

A new ICI Viewpoint entitled, "FTT Would Shut Financial Institutions in Participating Countries Out of Repo Market" tells us, "The European Commission has proposed imposing a 0.1 percent (10 basis points) levy on financial transactions. As ICI has detailed, this financial transaction tax (FTT) would have a host of negative consequences, including harm to investors and extraterritoriality. Here's another strike against the proposal: its impact on the market for repurchase agreements (repo). Proponents claim that the proposed tax -- 0.1 percent of the value of repo transactions involving financial institutions from the 11 countries that have signed on in support of the proposed tax -- would hardly affect market participants. But the opposite is true. For example, the FTT would be felt acutely by investors (including U.S. money market funds) conducting repo transactions in which financial institutions from those 11 countries were counterparties. Thus, the tax likely would work to eliminate repo as a source of funding to affected financial institutions, particularly French and German banks.... Repos are a form of short-term funding used largely by financial institutions such as banks. The financial institution sells the securities to investors, such as a money market fund, usually on an overnight basis, and agrees to buy them back at a higher price reflecting the cost of funding.... The FTT would create a substantial drag on repo yields for investors conducting repo transactions with affected financial institutions. In fact, it would produce negative net yields on repo -- both in the current low interest rate environment and at more normal interest rate levels for shorter duration repo."

The Federal Reserve Bank of New York released its latest "Weekly Release of Primary Dealer Positions, Transactions, and Financing, we learned from J.P. Morgan Securities' Alex Roever's weekly "Short-Term Fixed Income" update. Roever writes, "Last week, the New York Fed unveiled a significant makeover to its weekly dealer position reports. These reports greatly expand on the details that have been provided in the past on dealer positions, dealer financing activity, and fails. Additionally, for the first time ever, the Fed introduces maturity-specific data on financing transactions conducted in the specials and general collateral markets. Collectively, the revised reports provide additional transparency into the repo/securities lending market that have historically been unavailable.... There are three key changes to the dealer financing activity report. First, collateral coverage has expanded to include equities, municipal securities, and asset-backed securities. The inclusion of these securities has consequently increased the aggregate size of the repo/securities lending market, captured under "securities out" in the report, by $234bn to $3.1tr as of 4/3, the first reporting date under the new format.... Treasuries and Agency Mortgages still represent the two largest collateral classes currently being financed.... Equities are a distant third. Not surprisingly, the percentage breakdown by collateral of the overall repo/securities lending market is similar to that of the tri-party repo market. Indeed, roughly 60% of the repo market is done via tri-party; the rest is bi-lateral."

Reuters Breakingviews writes "Two-tier money market fund reform as clear as mud". It says, "Two-tier money market fund reform is as clear as mud. The U.S. Securities and Exchange Commission is trying again to regulate these mutual funds, which compete with bank deposit accounts. But the rules could favor funds that invest in government debt over those buying corporate debt. The SEC isn't talking specifics, but Larry Fink, chief executive officer of BlackRock, is. He told analysts this week that some funds may have to adopt a floating net asset value (NAV) -- a standard in the mutual fund industry but anathema to those running these accounts that invest in short-term debt. That's because investors, who view money market funds as higher-yielding savings accounts, could actually lose money if NAV is no longer pegged to $1 per share. But the scheme is the best option floated by regulators who want to stop 2008-like runs from happening again. It's simple and puts risk back where it belongs: on investors. But, according to Fink, it seems a floating NAV may not be applied to funds that invest in government debt like U.S. Treasuries. In a letter to regulators last December, BlackRock argued these funds, which represent 45 percent of the $2.5 trillion market, should be exempt. After all, they weren't part of the panic in 2008, which forced the government to bail out the industry with a blanket guarantee."

After we got a chance to examine the transcript for BlackRock's latest quarterly earnings call, we found only one mention of money market funds. William Katz from Citi asked, "[One] SEC Commissioner came out suggesting that there could be a money market proposal in the next month or so.... [W]hat you are hearing in terms of what it might be and how you might be prepared to react?" Fink answered, "I expect it to be some form of floating NAV. I mean I see no evidence to think it would be anything but a floating NAV on the prime type of funds. I don't believe there will be any form of floating related to the government type of funds. So I think -- I don't -- we don't expect any surprise. We had a whole team in Washington.... [I]t's a pretty dynamic situation but I do believe now with the Commissioner of the SEC and the Chairperson being finalized, I think we are going to see some type of announcement from the SEC shortly." Finally, note that Fink has called for reform proposals and floating NAVs several times in previous conference calls, but he's yet to call it correctly on MMF reforms.

WSJ writes "BlackRock CEO Sees Money Fund Fix". It says, "BlackRock Inc. Chief Executive Laurence Fink said stricter regulation could be on the way for the $2.6 trillion money-market-fund industry, in which BlackRock is a major player. Mr. Fink said during the company's earnings call Tuesday that he expects the Securities and Exchange Commission to impose "some sort of" floating net asset value on prime money-market funds, a departure from the stable $1 share price such funds seek to maintain. Prime money funds invest in short-term corporate debt, unlike government funds, which invest only in government securities.... 'We have been very loud from the very beginning, saying that money funds need to have structural changes,' said Mr. Fink, whose firm manages money-market-fund assets of $147.2 billion, according to Crane Data LLC. `But Mr. Fink added that, in the short run, he expects investors to pull money from prime money funds and move them to government funds, if the SEC imposes a floating value. A spokesman for the SEC said the agency's staff "expects to have something for the commission's consideration in the near future" but declined to comment on what those rules might be."

The National Law Review writes "SEC Staff Meets with IRS to Discuss Tax Implications of a Floating Net Asset Value (NAV)," which says, "SEC staff recently met with staff members of the IRS to discuss the tax implications of adopting a floating net asset value (NAV) for money market funds. The discussion centered on the tax treatment of small gains and losses for investors in money market funds, and the IRS reportedly told the SEC there is limited flexibility in interpreting current tax law. A floating NAV could require individual and institutional investors to regard every money market fund transaction as a potentially taxable event. Investors would have to determine how to match purchases and redemptions for purposes of calculating gains, losses and share cost basis. The SEC reached out to the IRS as it continues to consider measures, including a floating NAV, to enable money market funds to better withstand severe market disruptions." ."

On April 28-May 1, SIFMA, the Securities Industry & Financial Markets Association will host its annual "Operations Conference and Exhibit 2013." This show will feature a session on "Money Market Reform at 2pm on April 29 moderated by Timothy Cameron, Managing Director of SIFMA's Asset Management Group. Panelists will include: Peter Crane, President and Publisher, Crane Data; Andrew Linton, Executive Director and Head of Product Development, JPMorgan Global Liquidity Group, JP Morgan; Nancy Prior, President, Money Market Group, FMR Co.; and Joan Swirsky, Of Counsel, Stradley Ronon. The description says, "Money market reform is top-of-mind to regulators and market participants alike. Explore the current landscape of the money market fund industry, dive into regulatory reforms currently being contemplated by the SEC, and learn the potential effects they could have on your firm's operating model." Note also that the Investment Company Institute is hosting its "2013 General Membership Meeting."

ICI's latest "Money Market Mutual Fund Assets" says, "Total money market mutual fund assets decreased by $8.89 billion to $2.623 trillion for the week ended Wednesday, April 10, the Investment Company Institute reported today. Taxable government funds decreased by $4.81 billion, taxable non-government funds decreased by $1.01 billion, and tax-exempt funds decreased by $3.07 billion.... Assets of retail money market funds decreased by $3.22 billion to $905.44 billion. Taxable government money market fund assets in the retail category decreased by $750 million to $193.46 billion, taxable non-government money market fund assets decreased by $980 million to $518.18 billion, and tax-exempt fund assets decreased by $1.49 billion to $193.81 billion.... Assets of institutional money market funds decreased by $5.67 billion to $1.717 trillion. Among institutional funds, taxable government money market fund assets decreased by $4.06 billion to $700.34 billion, taxable non-government money market fund assets decreased by $30 million to $938.69 billion, and tax-exempt fund assets decreased by $1.58 billion to $78.05 billion."

The SEC issued a release yesterday entitled, "Mary Jo White Sworn in as SEC Chair," which said, "The Securities and Exchange Commission today announced that Mary Jo White was sworn in this morning as the 31st Chair of the SEC. Chairman White comes to the SEC with decades of experience as a federal prosecutor and securities lawyer. She was nominated to be SEC Chair by President Barack Obama on Feb. 7, 2013, and confirmed by the U.S. Senate on April 8." She commented, "It is an honor to lead the talented and dedicated SEC staff on behalf of America's investors and markets. Our markets are the envy of the world precisely because of the SEC's work effectively regulating the markets, requiring comprehensive disclosure, and vigorously enforcing the securities laws." The ICI wrote "ICI Applauds Senate Confirmation of SEC Chairman White", commenting, "ICI President and CEO Paul Schott Stevens issued the following statement after the U.S. Senate confirmed Mary Jo White to join the Securities and Exchange Commission: "We congratulate Mary Jo White on her confirmation by the U.S. Senate as a member of the Securities and Exchange Commission. Her long experience and notable accomplishments as an advocate for the public interest will serve her well in her new role as SEC Chair, carrying out the agency's vital missions of protecting investors and overseeing our capital markets. We look forward to working with her.""

Bloomberg writes "SEC Money-Market Fund Proposal Two Months Away, Gallagher Says". The article says, "New rules to reduce risk in money-market mutual funds will be proposed in the next two months by the U.S. Securities and Exchange Commission, which won't be slowed by a leadership change, a commissioner said today. Daniel M. Gallagher said the SEC's staff is working through technical details of the proposal, which failed to move forward last year under former SEC Chairman Mary Schapiro. Gallagher said he did not expect Mary Jo White, who takes over as chairman this week and sets its agenda, to slow consideration of the proposal, Gallagher said." The piece adds, "SEC Commissioner Elisse B. Walter, who will be replaced by White as chairman, said today that she hoped the FSOC would wait for the SEC's proposal before taking any further action."

Wells Fargo's latest "Overview, strategy, and outlook" discusses Cyrpus and its impact, saying, "Even though Cyprus is small relative to the Eurozone -- its GDP is roughly 0.2% of the eurozone GDP -- even small countries can have destabilizing effects elsewhere, as we witnessed with Greece. With Cyprus' banks being closed for approximately two weeks and a political stalemate in Italy, one would expect LIBOR (London Interbank Offered Rate) and sovereign credit default spreads (CDS) to widen. However, market participants seemed to shrug this episode off. As the graphs below indicate, LIBOR curves continued to flatten and sovereign CDS only widened by about 50 basis points (bps; 100 bps equals 1.00%). One possible reason for this muted reaction can be attributed to the global central banks' willingness and ability to provide easy monetary policies to support global initiatives. We have maintained for some time that the effects of the ECB's Long-Term Refinancing Operation and its ability to execute Outright Monetary Transactions have not only kept money market rates in check but have kept contagion risks somewhat muted. It seems like the "do whatever it takes" mantra in the form of unlimited sovereign debt purchases by the ECB has given investors across the curve confidence that central banks will likely continue to lend support, which should in turn keep bond yields low."

Sunday's New York Times features "Money Funds, Waiting for the Fog to Lift". The article says, "For decades, investors have waited out financial fogs like these in the haven of money market mutual funds. Unfortunately, the outlook for money funds themselves is just as obscure these days. After wrangling for four years over new rules that would fundamentally change how money funds work, the Securities and Exchange Commission has hit the pause button to await the arrival of a new chairwoman and to study the accounting and tax issues raised by its reform agenda. The money-fund industry, meanwhile, is bracing for new rules while facing old realities: low interest rates that discourage investors and compress fees.... A result is expected to be a new slate of proposals that can pre-empt the oversight council and win passage on a commission that will soon be led by Ms. White -- who has kept her own counsel on the topic. At her recent confirmation hearing, she barely mentioned the phrase "money market funds" in her prepared statement. Questioned about the issue, she said only that she was "acutely aware of the value of the money market fund product" and would "take care that that is not harmed".... The next shoe may drop soon. The annual meeting of the Investment Company Institute is scheduled for the first three days of May in Washington; traditionally, the head of the S.E.C. is the closing speaker at that event. If Ms. White has been sworn in by then, the lectern will most likely be hers -- and the fog may finally start to lift a little for money-fund investors."

A press release entitled, "Square 1 Asset Mgmt Launches," tells us, "Square 1 Bank, the premier banking partner to entrepreneurs and the venture capital community, today announced the launch of Square 1 Asset Management, a registered investment advisor. A subsidiary of Square 1 Bank, the firm is a cash management solution designed exclusively for corporations and their institutional investors. Focused on adding value through a client-centered process of understanding risk tolerance and investment objectives and providing individualized investment advice, Square 1 Asset Management offers clients customized solutions tailored to meet their unique corporate cash management needs. Adam Dean, seasoned asset management veteran, will lead the Square 1 Asset Management team as senior vice president and managing director. Mr. Dean brings over 15 years of experience in institutional asset management, including strategic, business development, and relationship management leadership as co-founder and president of SVB Asset Management, a division of Silicon Valley Bank. Mr. Dean will be based in Menlo Park, CA." Dean says, "Through the launch of Square 1 Asset Management, we are expanding the depth and breadth of products and services our growing client base expects from a premier commercial bank. Our goal, as with everything we do, is to provide clients with a better solution and experience than they can get anywhere else. Square 1 Asset Management will provide clients with superior service, industry-leading technology, and a highly-experienced leadership team, all on a very scalable platform. Our aim is to exceed the expectations of every one of our clients." The release adds, "The Square 1 Asset Management team also includes: Stefan Fencl, Vice President, Director of Investment Strategy. Mr. Fencl brings over 15 years of institutional cash management and financial services experience. He is recognized as an expert in short term fixed income markets and is a noted panelist on economics and investment strategies. Previously, he was senior portfolio manager and director of investment strategy at Capital Advisors Group. Michael Nguyen Vice President, Director of Credit Risk & Research. Mr. Nguyen has 15 years of extensive global experience in corporate credit, fixed income research, and structured finance. Previously, he worked closely with Mr. Dean as senior credit risk and research officer at SVB Asset Management."

We wrote yesterday on the acquisition of the HighMark Money Market Funds by Reich & Tang in our "News". But today we excerpt from their release, entitled, "Reich & Tang Acquires HighMark Funds' Money Market Mutual Fund Business." It says, "Reich & Tang today announced that it has entered into an agreement to acquire five money market funds from HighMark Capital Management, Inc., a wholly-owned subsidiary of Union Bank, N.A. The deal, which represents more than $4 billion in shareholder assets, has been approved by each company's Board of Trustees and is expected to close by July 2013." Michael Lydon, Chief Executive Officer of Reich & Tang, comments, "We are extremely pleased to have entered into this arrangement with HighMark Capital Management. The similarity in both firms' business structures creates an ideal pairing for a seamless acquisition, which will provide HighMark Fund shareholders with immediate cost benefits and integration into a highly stable, diversified client base." Dennis Mooradian, president of HighMark, adds, "A key benefit of the transaction is that our shareholders will have access to one of the industry's longest-tenured and time tested mutual fund advisers whose conservative investment philosophy is consistent with that of HighMark Funds. With cash becoming an increasingly important asset class, particularly over the past five years, we realize the importance of partnering with a specialist whose infrastructure for sweep programs will undoubtedly ensure that our shareholders experience a seamless transition."

Treasury Strategies will host a "Quarterly Corporate Cash Briefing" on Thursday, April 4. The announcement says, "During this 45-minute webinar, participants will hear the results of Treasury Strategies' ongoing research into corporate cash and the latest government statistics for total corporate cash holdings in the US, UK & Eurozone. Insights from our panel including Association of Corporate Treasurers (ACT), Federated Investors, and PNC will help participants understand the implications for our industry." The webinar takes place Thursday, April 4, 2013 at 10:00am Eastern. To register, click here. Treasury Strategies adds, "Discussion Highlights include: Central bank monetary policies and the implications; Effects of the unlimited FDIC insurance expiration; Transaction tax proposals and their effects; and, Corporate treasurers' financial outlook." Sponsors & Panel Participants include: Martin O'Donovan, Deputy Policy & Technical Director - Association of Corporate Treasurers (ACT), Deborah A. Cunningham, CFA, Chief Investment Officer - Federated Investors; Scott Horan, Senior Vice President, Treasury Management - PNC, and Treasury Strategies' Tony Carfang and Monie Lindsey."

Federated Investor's Debbie Cunningham writes in their latest "Month in Cash: Cyprus -- the mouse that roared," "During late March, all eyes were on the fiscal crisis bubbling over in Cyprus, despite the fact that the tiny island country off southeastern Europe represents only a small portion of the overall EU economy. The crisis seems to have been averted, if only temporarily, with a last-minute agreement that would have international creditors bailing out the troubled country -- but only in exchange for a tax on uninsured deposits over 100,000 euros in the country's second biggest bank, a move that could result in a 40% haircut for those depositors. There was some concern in the marketplace that the action might set a precedent, and depositors in other EU countries could be made to suffer if their respective governments couldn't get their fiscal houses in order. Depositors in the stronger EU countries, and in the solvent, high-quality banks within those countries (the banks Federated money funds deal with) aren't likely to be at risk. Large depositors in countries with less-than-solvent governments, such as Greece, might look at the Cypriot "solution" as a sign to get their money out of Greek banks before creditors come calling with an offer for a free haircut.... Repurchase (repo) rates were better than anticipated in March. They had been expected to run in the high single digits, but in fact held in at the 13-15 basis point range throughout much of the month. This was most likely a reflection of the issuance of cash management bills into the marketplace as tax payments went out from Washington. That might change in mid April -- individuals who file their taxes before April 15 are generally those who expect a refund, and those who file on the due date are those who owe, so the federal government should start seeing more cash coming in soon." Cunningham adds, "The confirmation hearings for Mary Jo White's nomination to head the Securities and Exchange Commission (SEC) went smoothly, and it's like to be a good development for money market funds, as it may add a fresh perspective in the ongoing regulatory debate. It's too early to tell exactly what position White might take on money funds, but given her background as the U.S. Attorney for the Southern District of New York it looks as if she would approach the issue with a thorough analysis of the facts and consider reasonable regulatory measures."

Bloomberg writes "EU May Make Money-Market Funds Hoard Cash, Liquid Assets". The article says, "Money-market funds may be forced by European Union regulators to hold minimum levels of liquid assets, and in some cases to hoard cash reserves, as part of a bid to toughen oversight of the $4.7 trillion global industry. Michel Barnier, the EU's financial services chief may require money-market funds that maintain a fixed share price to build up a cash "buffer" equivalent to 3 percent of their assets, according to draft proposals obtained by Bloomberg News. Barnier has identified regulation of money-market funds as a priority in the bloc's efforts to rein in so-called shadow banks.... `The EU money-market fund industry is concentrated in France, Ireland and Luxembourg, according to European Commission data. Funds domiciled in these three countries account for more than 95 percent of the EU MMF market."