Daily Links Archives: February, 2017

We learned from Fund Action that a Prospectus Supplement for the BlackRock Cash Funds: Prime explains, "On February 23, 2017, the Board of Trustees of BlackRock Funds III ... approved a proposal to close the Fund to new purchases and thereafter to liquidate the Fund. Accordingly, effective 3:00 p.m. (Eastern time) on April 24, 2017, the Fund will no longer accept purchase orders. On or about April 28, 2017, all of the assets of the Fund will be liquidated completely, the shares of any shareholders holding shares on the Liquidation Date will be redeemed at the 3:00 p.m. (Eastern time) net asset value per share and the Fund will then be terminated as a series of the Trust. Shareholders may redeem their Fund shares or exchange their shares into an appropriate class of shares of another money market fund advised by BlackRock Advisors, LLC or its affiliates, at any time prior to the Liquidation Date. The Fund may not achieve its investment objective as the Liquidation Date approaches. Shareholders should consult their personal tax advisers concerning their tax situation and the impact of the liquidation or exchanging to a different fund on their tax situation." BlackRock Cash Prime MMF Inst (BPIXX) currently has just $355 million in 3 share classes. The BlackRock Cash money funds, formerly Barclays Global Investors MMFs, have been shedding almost all of their non-securities lending assets, but the "SL" shares continue to hold sizeable balances in their Inst MMF and Treasury MMF.

As spring approaches, the first leg of the annual conference season also draws near. Crane Data, money fund providers, and various segments of the cash marketplace are preparing for a number of conferences over the coming months. Below, we review a couple that we'll be speaking at, attending, and/or hosting. First is next month's Crane's Bond Fund Symposium, which we've written about and mentioned. Our first bond fund event will be March 23-24 in Boston, and will focus on ultra-short bond funds. We don't have anything in April, but in May we'll be speaking at the SIFMA AMA Roundtable. This event, which attracts almost 100 brokerage sweep providers, will be May 7-9 in Boca Raton, Fla. Our Peter Crane will speak on "Money Fund & FDIC Product Trends, Statistics" with Brian Ronayne of Federated Investors and Kevin Bannerton of Total Bank Solutions. Crane will also host a "Panel Discussion - Brokerage Sweep Cash Options <b:>`_," which will feature Sunil Kothapalli of Wells Fargo Advisors, Michelle Lens of BNY Mellon/Dreyfus, and Lisa North of R.W. Baird. The SIFMA AMA Roundtable involves Brokerage product and sweep professionals and is run in conjunction with the SIFMA Ops Conference. (Contact Crane Data or SIFMA's Charles DeSimone to ask about attending or to see the agenda.) Crane Data will also be exhibiting at this spring's New England AFP 2017 Annual Conference event, which is May 17-19 in Boston. The NEAFP agenda is packed with money market fund content, including speakers from RBC, Fitch, Treasury Strategies, ICD, Goldman, Fidelity and State Street. We hope to see you there!

The Investment Company Institute released its latest weekly "Money Market Mutual Fund Assets" report, which shows Prime assets increasing for the third week in a row, and 8th out of the past nine weeks. Prime MMFs have risen by $18.9 billion, or 5.0% since 12/21/16. ICI's Asset release says, "Total money market fund assets increased by $5.14 billion to $2.68 trillion for the week ended Wednesday, February 22, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $2.60 billion and prime funds increased by $3.28 billion. Tax-exempt money market funds decreased by $740 million." Total Government MMF assets, which include Treasury funds too and which represent 80.4% of all money funds, stand at $2.155 trillion, while Total Prime MMFs, which total 14.7%, stand at $393.7 billion. Tax Exempt MMFs total $131.0 billion, or 4.9%. It explains, "Assets of retail money market funds increased by $1.68 billion to $977.83 billion. Among retail funds, government money market fund assets increased by $1.06 billion to $600.22 billion, prime money market fund assets increased by $670 million to $251.71 billion, and tax-exempt fund assets decreased by $50 million to $125.90 billion." Retail assets account for over a third of total assets, or 36.5%, and Government Retail assets make up 61.2% of all Retail MMFs. The release continues, "Assets of institutional money market funds increased by $3.46 billion to $1.70 trillion. Among institutional funds, government money market fund assets increased by $1.54 billion to $1.55 trillion, prime money market fund assets increased by $2.61 billion to $142.02 billion, and tax-exempt fund assets decreased by $680 million to $5.12 billion." Institutional assets account for 63.5% of all MMF assets, with Government Inst assets making up 91.4% of all Institutional MMFs. ICI's statistics show Prime money fund assets rising to their highest level since October 12, 2016, just prior to Money Fund Reforms going into effect. Government money market fund assets have fallen in six of the past nine weeks.

The Federal Reserve released its "Minutes of the Federal Open Market Committee, January 31-February 1, 2017" yesterday, which mentioned money market funds in a couple of spots. It says, "In money markets, interest rates smoothly shifted higher following the Committee's decision at its December meeting to increase the target range for the federal funds rate by 25 basis points, and federal funds subsequently traded near the center of the new range except on yearend. Although year-end pressures in U.S. money markets were similar to past quarter-ends, some notable, albeit temporary, strains appeared over the turn of the year in foreign exchange swap markets and European markets for repurchase agreements.... The Open Market Desk's surveys of dealers and market participants pointed to some change in expectations for FOMC reinvestment policy, with more respondents than in previous surveys anticipating a change in policy when the federal funds rate reaches 1 to 1 1/2 percent. The higher level of take-up at the System's overnight reverse repurchase agreement facility that developed following the implementation of money market fund reform last fall generally persisted." It adds, "Money market rates responded as expected to the change in the target range for the federal funds rate. The effective federal funds rate was 66 basis points -- 25 basis points higher than previously -- every day following the change, except at year-end. Conditions in other domestic short-term funding markets were generally stable over the intermeeting period. Assets under management by money market funds changed little, with government funds experiencing modest net outflows and prime fund assets remaining about flat.... The staff provided its latest report on potential risks to financial stability, indicating that it continued to judge the vulnerabilities of the U.S. financial system as moderate on balance.... [W]ith money market fund reforms in place, the vulnerabilities from maturity and liquidity transformation were viewed as being somewhat below their longer-run average." The Fed also says, "In discussing the outlook for monetary policy over the period ahead, many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased."

Citi's Rob Crowe writes in his latest "Global CP Market Commentary," "The USCP market experienced increased volatility on the week, as Fed Chair Yellen posed a relatively hawkish position at her semiannual report to Congress. In her testimony, Yellen emphasized the view that the U.S. economy has made progress toward the Fed's dual-mandate objectives of maximum employment and price stability.... Prior to Yellen's testimony, Fed Fund futures priced a 30% probability of a March rate hike, increasing to 44% post Yellen's testimony, and settling at 34% on Friday.... The combination of Yellen's testimony as well as continued demand for floating-rate paper tightened floating-rate spreads in a few bps on the week. Tier-1 issuers were able to access size in 1-year at 1mL+40 bps. Tighter spreads were off-set by LIBOR drifting higher on the week across most tenors. 3-month LIBOR started the week at 1.04%, increasing to 1.06% Thursday, and settling at 1.05% on Friday. Unsecured bank bullets traded in size in 6-months a touch wider week-over-week." It adds, "Prime assets increased on the week to $390.5 billion (+$2.5 billion week-over-week; +$8.2 billon month-over-month). According to Crane Data, the yield spread between Prime and Government funds widened out by 2 bps month-over-month to 32 bps, with Prime and Government funds offering a net yield of 48 bps and 16 bps, respectively."

J.P. Morgan Securities' latest "Taxable money market fund holdings update" tells us, "Prime AuM increased $9bn during January, led by institutional MMFs which grew by$11bn. Government and Treasury fund AuM fell $54bn. Prime AuM now stands at $383bn while government and Treasury fund AuM registers $2.1tn. The yield spread between prime and government funds widened out by 2bp to 32bp month-over-month. Prime and government MMFs currently offer net yields of 48bp and 16bp, respectively. Prime exposures to banks rebounded after year-end, increasing by $63bn. Time deposits grew $30bn, while CP/CD grew $25bn.... Offsetting the upturn in bank debt holdings was a $43bn reduction in RRP usage.... Additionally, holdings of Treasuries fell $7bn. The decline in Treasuries was concurrent with a $40bn reduction of bill supply and general tightening of short-term Treasury and agency yields." It adds, "Institutional funds tend to run higher liquidity levels than retail MMFs.... Furthermore, retail funds appear to utilize a barbell strategy where they invest in liquid assets such as Treasuries (Exhibit 4) and reach out on the curve past 90 days to supplement portfolio yields.... Government/agency money funds are major buyers in the market for agency discount notes. Of the $1.5tn in AuM in these funds, close to $400bn is allocated to discos.... Additionally, government/agency MMFs own a staggering 74% of the market for the three largest agencies."

BofA Merrill Lynch writes "Fed portfolio rundown impact on bank reserves and money markets." The piece says, "Chair Yellen's recent semi-annual congressional testimony reiterated core elements of the Fed's likely approach to balance sheet reduction, including that the balance sheet will decline in a gradual manner and that the Fed will rely on short-term interest rates as the primary tool for monetary policy. These comments were in line with our expectations for the Fed's portfolio.... When the Fed allows its balance sheet to decline, it will have important implications for the private banking sector and money markets. We expect the initial reduction in excess reserves will primarily come from foreign banks that hold reserves for opportunistic purposes and that have seen their reserve holdings decline in recent years (Chart of the Day). In our view, such a reserve reduction will likely result in: (1) reduced transaction volumes in overnight unsecured money markets, (2) limited incremental demand for high-quality liquid assets from domestic banks, and (3) increased buying of new Treasury issuance from non-bank sources, including government money market mutual funds." The article adds, "If bank HQLA-related Treasury buying is limited, then the Treasury will need to find other sources of demand to fund their increased issuance as the Fed's portfolio winds down. Recall, as the Fed's Treasury holdings mature, the Office of Debt Management will need to increase issuance in order to raise funds that can be used to pay back the Fed. We expect the Treasury could find strong demand from government-related money market mutual funds in this regard. The Office of Debt Management will likely look to offset any reduction in the Fed's Treasury holdings through new issuance concentrated at the front-end of the curve, including increased bill supply."

CNBC writes "Goldman, JPMorgan boost rate hike expectations on hotter inflation". They tell us, "Fed Chair Janet Yellen pushed up the odds of a March hike with her hawkish comments Tuesday during her Senate testimony, but the strength of Wednesday's retail sales and hotter-than-forecast CPI inflation data nudged them even higher -- to about 30 percent. JPMorgan economists, in fact, changed their forecast for a June rate hike to May based on the two economic reports. 'We still think March is too early for them to hike, particularly given their propensity to prepare markets for a move. Instead, we think March would be a good meeting for them to prepare the markets for a hike at the subsequent meeting on May third,' the economists wrote. Most Fed watchers have forecast a June rate hike. Goldman Sachs economists also said that based mostly on the hotter inflation reading, the likelihood of a March hike increased to 30 percent from 20 percent, but they also see a better chance for May." The piece adds, "The Consumer Price Index jumped 0.6 percent in January, after rising 0.3 percent in December, for its biggest monthly gain in four years. The CPI was up 2.5 percent, in the largest year-over-year gain since March 2012. It rose above 2 percent for the first time in two years in December.... The Fed has a target of 2 percent inflation, though it favors looking at the personal consumption expenditure inflation data, which is under 2 percent.... Retail sales also were higher than expected, rising 0.4 percent in January. Sales were revised up for December to 1 percent."

The Treasury's Office of Financial Research posted a blog entitled, "Money Market Funds' Floating NAVs Stay in Narrow Range for Now." It says, "Money market funds for decades sold and redeemed their shares in normal times at a stable price, usually $1.00. But in the financial crisis, as the values of their investments came under pressure, one money market fund "broke the buck," triggering a flight of investors from similar funds. To reduce the risk of runs, regulators recently required shares of non-government funds for institutional investors to begin trading at a market-based (or floating) net asset value (NAV). The OFR's ongoing analysis of fund data lets us track how much those share prices vary. So far, NAVs have not shifted much. The real test, however, will come with market stress, when shocks pressure the value of such funds' assets." The piece adds, "Under the new rule, money market funds must calculate the market value of their shares out to four decimal places. For example, a fund's share price might be $1.0001, $1.0000, or $0.9999. Funds that sell only to individual investors don't have to use floating NAVs, but still must report floating NAVs to investors and regulators. Before the Securities and Exchange Commission (SEC) rule went into effect, funds could round up their NAV to a stable value -- typically an even $1. Some industry observers worry that variation in floating NAVs might raise investors' concerns and still create runs. The OFR's analysis of new fund data finds that, so far, floating NAVs have varied little from $1."

Invesco Fixed Income writes "Countdown to Debt Ceiling Debate." The piece, written by Justin Mandeville, says, "As the March 15 deadline approaches, U.S. Treasury bills could become increasingly volatile. In the first quarter of 2017, a newly minted Congress will be tasked with approving an increase in the U.S. government's debt limit -- the so-called "debt ceiling" -- which is set to expire on March 15, 2017. If the debt ceiling is not raised, the US Treasury bill market could experience volatility as investors adjust to a potential reduction in the supply of Treasury bills.... If the debt ceiling is not raised in March, the US Treasury's cash balance, which is mandated by law, would need to decrease dramatically, which in turn means a sharp reduction in the need for US Treasury bill issuance.... With the debt ceiling battle on the horizon, we could see volatility in US Treasury bills in the coming months."

A Prospectus Supplement filing from Deutsche Asset Management, along with a notice from the fund manager, tells us that DAM is changing the names on a number of its money market funds, officially adding the "Deutsche" moniker to many. The changes will officially take effect on Feb. 15, and will include: Government & Agency Securities Portfolio will now be Deutsche Government & Agency Securities Portfolio; Tax-Exempt Portfolio will be Deutsche Tax-Exempt Portfolio; Treasury Portfolio will be Deutsche Treasury Portfolio. The fund changes also include: ICT - Treasury Portfolio - Institutional Shares (ICTXX) will become Deutsche Treasury Portfolio - Institutional Shares; ICT - Treasury Portfolio - Deutsche U.S. Treasury Money Fund Class S (IUSXX) will become Deutsche Treasury Portfolio - Deutsche U.S. Treasury Money Fund Class S; ICT - Treasury Portfolio - Capital Shares (ICGXX) will become Deutsche Treasury Portfolio - Capital Shares; ICT - Treasury Portfolio - Investment Class (ITVXX) will become Deutsche Treasury Portfolio - Investment Class; CAT - Government & Agency Portfolio: Deutsche Government & Agency Money Fund (DTGXX) will become Deutsche Government & Agency Portfolio: Deutsche Government & Agency Money Fund; CAT - Government & Agency Portfolio: Service Shares (CAGXX) will become Deutsche Government & Agency Portfolio: Service Shares; CAT - Government & Agency Portfolio: Deutsche Gov't Cash Inst (DBBXX) will become Deutsche Government & Agency Portfolio: Deutsche Gov't Cash Inst CAT - Government & Agency Portfolio: Gov't Cash Managed (DCMXX) will become Deutsche Government & Agency Portfolio: Gov't Cash Managed; CAT Tax Exempt Portfolio: Service Shares (CHSXX) will become Deutsche Tax Exempt Portfolio: Service Shares; CAT Tax Exempt Portfolio: Tax Exempt Cash Managed Shares (TXMXX) will become Deutsche Tax Exempt Portfolio: Tax Exempt Cash Managed Shares; CAT Tax Exempt Portfolio: Deutsche Tax-Free Money Fund - Class S (DTCXX) will become Deutsche Tax Exempt Portfolio: Deutsche Tax-Free Money Fund - Class S; CAT Tax Exempt Portfolio: Deutsche Tax-Exempt Money Fund (DTBXX) will become Deutsche Tax Exempt Portfolio: Deutsche Tax-Exempt Money Fund; and, CAT Tax Exempt Portfolio: Tax Free Investment Class (DTDXX) will become Deutsche Tax Exempt Portfolio: Tax Free Investment Class.

Prime money market mutual fund assets rose by $3.5 billion in the latest week, their 6th increase in the past 7 weeks (up $13.1 billion). ICI's latest weekly "Money Market Fund Assets" report says, "Total money market fund assets decreased by $3.23 billion to $2.68 trillion for the week ended Wednesday, February 8, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $6.69 billion and prime funds increased by $3.49 billion. Tax-exempt money market funds decreased by $20 million." Total Government MMF assets, which include Treasury funds too and which represent 80.6% of all money funds, stand at $2.157 trillion, while Total Prime MMFs, which total 14.5%, stand at $388.0 billion. Tax Exempt MMFs total $131.5 billion, or 4.9%. It explains, "Assets of retail money market funds increased by $2.59 billion to $979.35 billion. Among retail funds, government money market fund assets increased by $2.04 billion to $601.71 billion, prime money market fund assets increased by $230 million to $251.18 billion, and tax-exempt fund assets increased by $320 million to $126.46 billion." Retail assets account for over a third of total assets, or 36.5%, and Government Retail assets make up 61.4% of all Retail MMFs. The release continues, "Assets of institutional money market funds decreased by $5.82 billion to $1.70 trillion. Among institutional funds, government money market fund assets decreased by $8.74 billion to $1.56 trillion, prime money market fund assets increased by $3.26 billion to $136.82 billion, and tax-exempt fund assets decreased by $340 million to $5.01 billion." Institutional assets account for 63.4% of all MMF assets, with Government Inst assets making up 91.6% of all Institutional MMFs.

Wells Fargo Securities Garret Sloan wrote in yesterday's "Daily Short Stuff," "Prime money market funds have gained $3 billion over the past week, even as Treasury funds have lost $4.5 billion and government funds lost $7.4 billion. By contrast, prime retail funds lost $1.3 billion and government retail funds gained $4.1 billion. From a WAM/WAL standpoint, institutional prime fund WAM/WALs are currently at 24/49 days and institutional government funds are at 40/92 days. Based on the Crane indices, the average spread between institutional government and prime currently sits at 24 basis points, with a maximum spread, based on the share classes with the highest balances, of as much as 42 basis points. The spread between prime and government institutional funds over the long-term has been closer to 15 basis points (excluding the financial crisis period). In that context, there has clearly been a sharp increase in the basis between government and prime funds, to the point where the yield differential may begin to outweigh the structural drawbacks of prime funds." (See also our latest Money Fund Intelligence article, "Time for Prime Comeback Say MMF Managers; Rates Higher.)

J.P. Morgan Securities' latest "Short Duration Strategy Weekly" contains a brief "Ultrashort and short-term bond fund update." They explain, "Ultrashort and short-term bond funds are one subsector of the non 2a-7 space that have received a relatively increased amount of attention post-MMF reform. These "alt-cash" vehicles are comprised of ETFs and open-ended mutual funds that invest primarily in high grade fixed income securities maturing anywhere between 6 moths to 3.5 years – well beyond what most consider to be the traditional money market arena. We consider a fund to be ultrashort if its average portfolio duration is between 0.5-1.5 years. Funds with average portfolio durations of 1.5-3.5 years are grouped into the short-term bond category. Furthermore, within each category, we have identified four prevalent investing strategies – government, conservative credit, credit, and multi-sector.... On average, these varying fund strategies can generate returns that outperform MMFs." The segment adds, "Obviously, fund profiles with broader and riskier strategies tend to offer higher returns than their counterparts, but also more risk.... In addition to being exposed to potential negative returns, there are other drawbacks of ultrashort and short-term bond funds versus MMFs. As liquidity vehicles, MMFs offer daily liquidity while these funds typically settle between 1 to 3 days. Additionally, ultrashort and short-term NAVs can be much more volatile compared to MMFs depending on market conditions and the securities they own. While MMF reform initially generated interest in this sector, the scale to which money entered was small relative to the $1tn+ swath of cash that left prime money funds. Moreover, post-reform interest is modest and looks to have leveled off.... While short duration funds and ETFs may continue to grow, we suspect SMAs will continue to be the leading non-MMF cash alternative for institutional money given the greater flexibility for investors to customize portfolio composition and liquidity."

A statement from the Federal Reserve Bank of New York entitled, "Reverse repo counterparties list updated," says, "American Funds U.S. Government Money Market Fund has been added to the list of reverse repo counterparties, effective February 6, 2017." A recent Name Change comments, "The Investment Manager primarily responsible for the day-to-day management of the Edward Jones Money Market Fund’s portfolio changed from Passport Research, Ltd. to Federated Investment Management Company, effective January 27, 2017." The site says about the "Role of reverse repo counterparties in New York Fed market operations," "Reverse repo (RRP) counterparties only operate with the New York Fed as cash providers in the Desk's reverse repo operations. As such, they play a much more limited role in the Desk’s operations than primary dealers, which may serve as counterparties in all of the Desk’s domestic open market operations. RRP counterparties are expected to bid in an operation at least twice every six months." The "Eligibility criteria says, "In order to be eligible as a reverse repo counterparty, a firm must be either: a state or federally chartered bank or savings association (or a state or federally licensed branch or agency of a foreign bank) with total assets equal to or greater than $30 billion, or reserve balances equal to or greater than $10 billion on the last quarter for which relevant reports are available; or, a government-sponsored enterprise that either has an average daily outstanding amount of RRP transactions of no less than $1 billion for the past three months, or has an average daily amount outstanding of overnight money market transactions of no less than $100 million over the past three months; or, an SEC-registered 2a-7 fund that has, measured at each month-end for the most recent six consecutive months, either net assets of no less than $5 billion or an average outstanding amount of RRP transactions of no less than $1 billion."

A press release entitled, "Invesco Launches Treasury Collateral Portfolio (CLTL), Leveraging the Efficient ETF Structure to Create a Collateral Pledge Solution for Institutions," tells us, "Invesco, a leading global provider of exchange-traded funds (ETFs), announced today the launch of PowerShares Treasury Collateral Portfolio (NYSE: CLTL) as an ETF designed to track the price and yield of the ICE US Treasury Short Bond Index, a market value weighted index that includes US dollar denominated, fixed and floating rate securities with minimum term to maturity greater than one month and less than or equal to one year in the US Treasury market." (See also ETF Trends' "PowerShares Launches Ultra-Short-Term Bond ETF, Cash Alternative" and our July 1, 2016 Link of the Day, "Invesco ETF of Govt MMFs.) The Invesco release continues, "PowerShares CLTL is an ETF solution designed for institutional and retail clients. On the institutional side, the ETF may offer an alternative to clients who need to post collateral to meet margin requirements or non-margin collateral. For retail clients, CLTL provides a convenient, low cost option to access safe haven instruments such as US Treasuries with ultra-short duration." Dan Draper, Global Head of PowerShares by Invesco, comments, "As an ETF leader, we're always looking for new solutions to help institutional and retail clients navigate the evolving macro and regulatory environment. Money market reform will have an impact on US investors going forward, so we're introducing this Treasury collateral ETF to help ease certain challenges on deck for our clients." The release adds, "CLTL's portfolio will also be managed by Invesco's Global Liquidity Group, which consists of 16 investment professionals and over $80 billion in AUM."

An announcement entitled, "Moody's assigns a Aaa-mf rating to State Street Institutional US Government Money Market Fund" tells us, "Moody's Investors Service ("Moody's") has assigned a Aaa-mf rating to State Street Institutional US Government Money Market Fund, as well as to its six share classes (together, "the Funds"): State Street Institutional US Government Money Market Fund -- Premier Class; State Street Institutional US Government Money Market Fund - Investor Class; State Street Institutional US Government Money Market Fund - Administration Class; State Street Institutional US Government Money Market Fund - Investment Class; State Street Institutional US Government Money Market Fund -- Institutional Class; and, State Street Institutional US Government Money Market Fund - M Class. The Aaa-mf rating reflects our view of the Funds' ability to meet the primary objectives of preserving capital and liquidity. Our view is also supported by the Funds' high scores across all key rating considerations. The Funds score high with respect to credit quality as it invests primarily in US government and agency obligations, US Treasury securities, obligations issued by US government sponsored entities as well as repurchase agreements backed by government securities. We expect the Funds to maintain high credit quality, low asset concentration and a short-weighted average maturity. The Funds also scored high with respect to market risk exposure and liquidity. Under our net asset value stress test, the Funds' underlying portfolio exhibits relatively modest volatility. They also display a strong liquidity profile that is supported by a diverse investor base that is primarily made up of institutional clients and high levels of overnight and near-term liquidity. The Funds are organized in a master-feeder structure in which six distinct share classes comprise one feeder fund. The feeder invests all of its investable assets and interests into the assets of the master portfolio. Our assessment and credit rating of these share classes is based on the quality of the master portfolio. State Street Institutional US Government Money Market Fund was established in 2007 with the objective of maximizing current income, preserving capital and liquidity while maintaining a constant per share net asset value. State Street Global Advisors Funds Management, Inc. (SSGA FM) is the investment adviser to the Fund. The company is a wholly-owned subsidiary of State Street Corporation (A1 stable)." See also, "Moody's assigns Aaa-mf ratings to two feeder funds of [UBS] Master Trust - Government Master Fund: Select (Cay) Government Preferred Fund Ltd. and Select (Cay) Government Institutional Fund Ltd.." which says, "."

A press release entitled, "StoneCastle Acquires Insured Deposit Sweep Business from Intermedium Financial," explains, "StoneCastle Insured Cash Sweep, LLC ("StoneCastle" or the "Company"), a wholly owned subsidiary of StoneCastle Cash Management, LLC, a market leading provider of insured deposit technology and services to institutional investors, announced today that it has acquired the insured deposit sweep business of Intermedium Financial, LLC ("Intermedium"). The transaction includes the InterLINK FinTech platform and related assets. The purchase of Intermedium's sweep business strengthens StoneCastle's position as a leading insured deposit provider for institutional investors and fulfills its strategy of expanding its reach into broker-dealer, financial advisor, 401k, and additional market segments." Stephen Rotella, CEO of StoneCastle, comments, "We plan to be a disruptive and differentiated force in the insured sweep industry. The InterLINK platform complements and augments our current technology-driven business and significantly expands our distribution options. We expect to add significant value to financial intermediaries and the clients they serve through the efficiencies created by this transaction and our proven ability to deliver deposit capacity." The release adds, "The company announced that it will operate the sweep business under the StoneCastle name while retaining the InterLINK brand. Existing customers and banks will not be impacted by the acquisition. Intermedium's San Diego office will continue to serve as the Operations Center for the sweep business."

Stradley Ronon published a "CFTC Quarterly Review," which included a segment entitled, "Practical Application of No-Action Letter No. 16-68 Regarding Investments in Money Market Mutual Funds." It explains, "In our quarterly alert for the third quarter of 2016, we reported that on August 8, 2016, the CFTC's Division of Clearing and Risk (DCR) and DSIO issued separate interpretative and no-action letters regarding permissible investments in money market funds (MMFs) by derivatives clearing organizations (DCOs) and FCMs following final implementation of the U.S. Securities and Exchange Commission's (SEC) money market reform rules. The August 8 letters stated the CFTC's view that following implementation of the SEC's MMF reform, all prime MMFs and those government MMFs that elect to impose redemption fees and gates (electing government MMFs) no longer meet the necessary redemption and liquidity requirements to serve as permitted investments under CFTC rules that strictly limit the types of instruments in which FCMs and DCOs may invest customer funds, or in which DCOs may hold certain other funds. On October 18, 2016, DSIO issued a follow-up letter providing guidance on these points (the October letter)." The brief adds, "Among other things, the October letter clarified that a prime MMFs or electing government MMF may adjust the CFTC Regulation 1.26 form acknowledgment letter to state that the fund may suspend redemptions or impose liquidity fees consistent with SEC Rule 2a-7. CFTC Letter No. 16-68 provides limited relief to FCMs to invest the amount of residual interest that exceeds their targeted residual interest amounts held in customer segregated accounts in prime MMFs and electing government MMFs. The relief is limited only to the amount of funds that the FCM would otherwise be permitted to withdraw from the segregated accounts. Accordingly, in order to give effect to the relief provided by CFTC Letter No. 16-68, the acknowledgment letter that the FCM executes with the prime or electing government MMF may contain a provision that the fund may suspend redemptions or impose liquidity fees consistent with SEC Rule 2a-7. The prospectus of the prime or electing government MMF also may include a statement that the fund may suspend redemptions or impose liquidity fees consistent with SEC Rule 2a-7. FCMs, however, are not required by CFTC Letter No. 16-68 to obtain new acknowledgment letters for existing prime or electing government MMF accounts. The October letter also outlined how asset-based and issuer-based concentration limits are applied to government MMFs."