Press Releases Archives: May, 2010

Federated Investors posted "Money Market Memo: What new reforms mean for Federated -- and you" yesterday. The piece explains the new SEC Money Market Fund Reforms. It says, "Early in 2010, the Securities & Exchange Commission adopted a series of reforms -- notably several amendments to Rule 2a-7 -- designed to improve disclosure, enhance liquidity, further limit risk and in general prevent future disruptions across the money market fund industry. Federated welcomes the following new reforms -- many of which reflect longstanding practices at the company -- that go into effect May 28 and June 30, 2010." In other news, see yesterday's Bloomberg article "Foreign U.S. Commercial Paper Issuance Falls Most in 10 Months", which says, "U.S. commercial paper outstanding sold by foreign financial companies and their domestic units fell the most in 10 months as fund managers trim holdings of the short-term debt issued by European banks." Bloomberg quotes our Peter Crane, "The funds are merely shortening maturities and letting paper roll off, rather than fleeing." Finally, see S&P's "Putnam Global Liquidity Fund Rated 'AAAm'".

SmartMoney writes "Money-Market Funds: Will Reform Matter?" The article says, "One of the many amendments to the package of financial sector reforms would change the laws for money-market funds by removing a provision that requires these funds to include credit agency ratings of their underlying securities. In theory, the amendment could make money-market funds a riskier investment. They wouldn't include a second opinion that their underlying securities constitute a minimal credit risk. In other words, these funds could invest in riskier securities in an effort to bolster their returns, which have declined this year.... Because money-market funds are among the few financial instruments where rating agency evaluations are required by law, rather than industry practice, the provision, sponsored by Sens. George LeMieux (R., Fla.) and Maria Cantwell (D., Wash.) could hurt the big rating agencies: Moody's, Standard & Poor's and Fitch. However, in practice, even if the amendment makes it into the final version of the law, experts say little will change in the composition of these funds, which are among the least risky -- and least remunerative -- options for investors. The current language requires money-market funds to select securities from the two highest-rated categories of credit risk, as classified by nationally recognized statistical rating organizations, or NSROs." The piece quotes Peter Crane, president of Crane Data, "The ratings are an integral part of the money markets." In other news, see FT's "Cesr bans enhanced money market funds".

At 3:30-4:30pm today (Wednesday), the Association for Financial Professionals (AFP) hosts a Webinar entitled, "Money Market Mutual Funds: Reviewing the New Regulations & Discussing the Outlook for Future Changes." The session description says, "Money fund expert Peter Crane from Crane Data will review recent changes to Rule 2a-7, the SEC's guidelines for money market funds. Crane will also discuss the possibility of more radical future changes to money funds' structure, such as a floating price, capital reserves or an emergency liquidity bank facility. Crane will review recent asset trends and the zero and pending rising rate environment." Registration is complimentary. The National Investment Company Service Association, or NICSA, also hosts a separate Webinar Wednesday at 2:00-3:15pm. The session is entitled, "Preparing for Amendments to Money Market Mutual Fund Rules, a Nuts and Bolts Perspective," and features Fidelity's Nancy Prior, State Street's Paul Ricci, SEC's Penelope Saltzman and ALPS Fund Services' Brad Swenson. The description says, "This webinar will provide an overview of the Money Market Mutual Fund Reform from several different perspectives including: Portfolio management, Financial Reporting, Fund Accounting, and Transfer Agency operations.... Mutual fund professionals from all aspects of the industry will learn about how the new rule impacts their area of responsibility as well as upstream and downstream departments."