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Investment News writes "​SEC money fund reform won'​t placate everyone". The article says, "Players in the $​2.​7 trillion money market fund industry are cautioning that even if the SEC moves ahead on its money market reform plan, not everyone will be satisfied. One big sticking point is a proposal that could leave in limbo the opaque accounts used by brokerage firms and retirement plans with retail clients.... The Securities and Exchange Commission this year is expected to act on reforms of money market mutual funds, with the possibility of imposing a proposal that requires fluctuating share prices, or net asset values, for institutional share classes. Industry representatives, however, expect the regulator to leave largely intact a legal regime that allows retail customers to rely on the consistent pricing of the products at $​1 per share -- a hallmark of money market funds. At stake is the definition of what exactly qualifies as an institutional fund, including the status of an unknown number of accounts processed internally by firms such as broker-​dealers, rather than fund companies, according to several observers of fund industry regulation. Many funds have a half dozen share classes in the gray area between institutional and retail, according to Peter G. Crane, founder of research firm Crane Data." IN quotes Crane, "Everything in between possibly could come under an intermediary that may be eligible for look-​through treatment. The real question is going to be: How are those details written, and how liberal are they, and how easily could brokerages or intermediaries take advantage of those loopholes?"

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Bloomberg clarified yesterday'​s WSJ article with its "SEC Said to Weigh Industry'​s Retail Exemption in Money-​Fund Rule." It says, "Securities regulators are considering a change in how they exempt retail investors from proposed restrictions on money-​market mutual funds after fund companies complained the original plan was too onerous, according to three people familiar with the matter. The new plan would allow retail funds that only have individuals as shareholders to keep their stable $​1 share price, according to the people, who asked to not be named because the plan isn’​t public.... About 10 percent to 20 percent of the $​2.​7 trillion industry lies in a gray area between retail and institutional users, according to Peter Crane, president of research firm Crane Data LLC in Westborough, Massachusetts. It'​s unclear how the industry'​s recommended definition of retail funds would affect the number of funds subject to a floating-​share price. If adopted, regulators would have to find a way to get small businesses that sometimes use retail funds to switch to other products, or provide them with an exemption to continue using them." Bloomberg quotes Robert E. Plaze, a partner at Strook & Strook & Lavan LLP, "I don'​t think this approach would expand the retail exemption beyond what the SEC proposed. I think it'​s being pushed by the industry principally for operational simplicity."

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The March issue of Crane Data'​s Money Fund Intelligence was sent out to subscribers on Friday morning. The latest edition of our flagship monthly newsletter features the articles: "Commissioners Push Alternatives in Reform Debate," which reviews recent SEC comments on pending regulations; "Federated Investors Debbie Cunningham," which interviews Federated'​s CIO for Global Money Markets; and, "Cash Breaks $​10 Trillion; Deposits Continue Surging," which reviews the continued growth in bank deposits. We also updated our Money Fund Wisdom database query system with Feb. 28, 2014, performance statistics and rankings last night, and we sent out our MFI XLS spreadsheet earlier. (MFI, MFI XLS and our Crane Index products are available to subscribers at our Content center.) Our February 28 Money Fund Portfolio Holdings data are scheduled to go out on Tuesday, March 11.

The latest MFI newsletter'​s lead article comments, "After SEC Chair White indicated last month that completing money fund regulatory reforms is a "​critical priority for the Commission in the relatively near term of 2014," several other SEC Commissioners have weighed in on the topic in recent speeches. Commissioner Michael Piwowar told the Wall Street Journal that he advocated letting investors choose between a floating NAV and a gates and fees option, while Commissioners Gallagher and Stein blasted and defended the FSOC, respectively. Meanwhile, meetings and lobbying over the pending regulations continues."

As we wrote in our March 4 CraneData.​com News , "The Journal commented late last week: As U.​S. securities regulators move to finalize long-​awaited rules aimed at reducing risks to the $​2.​7 trillion money-​market mutual-​fund industry, one official wants investors to have greater choice in the types of funds in which they can invest."

The "​profile" with Federated'​s Cunningham says, "This month MFI interviews Federated Investors' Executive VP & CIO for Global Money Markets Deborah Cunningham. Our Q&​A follows. MFI: Tell us about your history. Cunningham: From Federated'​s perspective, we'​ve been involved in running cash since the beginning of time. We now have the oldest registered money market fund on the books of the SEC, Federated Money Market Management. It has 40+ years of history at this point. We ran cash before we even had funds, so we had risk-​averse strategies from the very beginning."

Cunningham'​s intro continues, "As far as our historical involvement in the money fund industry, we'​ve been involved in every step of the process, from the original exemptive orders that led to amortized cost, to the first go-​round of 2a-​7, to the '​92 amendments, the '​96 amendments, the 2010 amendments, etc.... I started at Federated in 1981, and began in our accounting department. I moved in to the Investment Management and began actively involved in the team management process for the money funds in 1986." (​Watch for excerpts of this interview later this month, or write us to request the full article.)

The February MFI article on Cash Breaking $​10 Trillion explains, "The latest Federal Reserve statistics show that bank deposits, the main competitor of money funds and main beneficiary of the financial crisis, continue to surge, even following last year'​s expiration of unlimited FDIC insurance. Overall cash, including bank deposits (​in banks and thrifts), money fund assets and small time deposits, broke above the $​10 trillion level late last year for the first time in history."

Crane Data'​s March MFI with Feb. 28, 2014 data shows total assets falling by $​44.​9 billion (​after rising by $​561 million last month) to $​2.​574 trillion (​1,​238 funds, the same number as last month. Our broad Crane Money Fund Average 7-​Day Yield and 30-​Day Yield remained at a record low 0.​01% while our Crane 100 Money Fund Index (​the 100 largest taxable funds) yielded 0.​02% (​7-​day and 30-​day). On a Gross Yield Basis (​before expenses were taken out), funds averaged 0.​13% (​Crane MFA, down one bps) and 0.​16% (​Crane 100) on an annualized basis for both the 7-​day and 30-​day yield averages. (​So Charged Expenses averaged 0.​12% and 0.​14% for the two main taxable averages.) The average WAM and WAL for the Crane MFA and the Crane 100 were 45 and 47 days, respectively, unchanged from last month. (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)

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Preparations are underway for Crane Data'​s 6th annual Money Fund Symposium, which will be held June 23-​25, 2014 at The Renaissance Boston Waterfront. The Agenda and the brochure are now available via PDF and on the Symposium website (​www.​moneyfundsymposium.​com), and we are now accepting registrations ($​750) and hotel reservations. (​Brochures were recently e-​mailed to past attendees and Crane Data subscribers, but contact us at info@​cranedata.​com to request the full one.) Last year'​s Money Fund Symposium in Baltimore attracted over 450 attendees and over 30 sponsors and exhibitors, making it the world'​s largest annual gathering of money fund and money market professionals. Participants include money fund managers, marketers and servicers, cash investors, money market securities dealers, issuers, and regulators.

After an initial "Welcome to Money Fund Symposium 2014" by Peter Crane, President & Publisher of Crane Data, this year'​s agenda in Boston will start the afternoon of June 23 with the keynote speech "Money Market Funds - Past & Future" by Fidelity Investment'​s Nancy Prior. The opening afternoon will also feature: "Strategists Speak '​14: Fed Taper, Repos, Regs" with Brian Smedley of Bank of America Merrill Lynch, Joseph Abate of Barclays , and Garret Sloan of Wells Fargo Securities. This will be followed by a panel entitled, "The Growing Role of Online Trading Portals," moderated by Dave Agostine of Cachematrix and including: Greg Fortuna of State Street'​s Fund Connect, Justin Meadows of MyTreasury, and Jonathan Spirgel of BNY Mellon Liquidity Services. The first day will close with a panel, moderated by Fitch Ratings' Roger Merrritt entitled, "Major Money Fund Issues 2013," featuring Charlie Cardona of BNY Mellon CIS/​Dreyfus, Andrew Linton of J.​P. Morgan A.​M., and Steve Meier of State Street. The opening reception will be sponsored by Bank of America Merrill Lynch.

Day 2 of Money Fund Symposium features: "The State of The Money Market Fund Industry" with Peter Crane of Crane Data, Debbie Cunningham of Federated Investors, and Alex Roever of J.​P. Morgan Securities; "Senior Portfolio Manager Perspectives," moderated by Joel Friedman of Standard & Poor'​s Ratings and including Rich Mejzak of BlackRock, Rob Sabatino of UBS Global Asset Management, and John Tobin of J.​P. Morgan Asset Management; "Government MF Issues & Repo Update," with Andrew Hollenhorst of Citi, Marques Mercier of Invesco, and Mike Bird of Wells Fargo Advantage Funds; and "Treasury Dept. on FRNs & Risk Agenda" with U.​S. Department of the Treasury'​s Matt Rutherford.

The afternoon of Day 2 (​after a Dreyfus-​sponsored lunch) features: "Dealer Panel: Supply Outlook, New Products," moderated by Dave Sylvester of Wells Fargo Funds and featuring Chris Condetta of Barclays, John Kodweis of J.​P. Morgan Securities, and Jean-​Luc Sinniger of Citi Global Markets; "Accounting Issues, Disclosure & Floating NAVs," with Chris May of PriceWaterhouseCoopers; "Enhanced Cash, ETF & Ultra‐​Short Bond Growth," with Alex Roever of J.​P. Morgan Securities, Jonathan Carlson of BofA Global Capital Management, and Peter Yi of Northern Trust; and, "European & Global Money Fund Outlook" with Jonathon Curry of HSBC Global Asset Management and Dan Morrissey of William Fry. (​The Day 2 reception is sponsored by Barclays.)

The third day of Symposium features: "Money Fund Reforms A Look at the Final Rule," with Stephen Keen of Reed Smith and Jack Murphy of Dechert LLP; "Regulatory Roundtable: Discussing New Rules" with Jane Heinrichs of the Investment Company Institute, Kevin Meagher of Fidelity, and Sarah ten Siethoff of the U.​S. Securities & Exchange Commission; and, "Corporate Cash Investor Issues & Alternatives, with Tony Carfang of Treasury Strategies, Lance Pan of Capital Advisors, and Jamie Cortas of EMC Corp. Finally, the last session is entitled, "FDIC, Brokerage & Retail MMF Update," and features Rick Holland of Charles Schwab, Ted Hamilton of Promontory Interfinancial Network, and Tim Schiltz of Ameriprise Financial.

Money Fund Symposium 2014 promises to be "​the" place to be for money market professionals -- register and reserve your spot today! Exhibit space for Money Fund Symposium is $​3,​000; and sponsorship opportunities are $​4.​5K, $​6K, $​7.​55K, and $​10K. Finally, our next "​offshore" money fund event, European Money Fund Symposium, is scheduled for Sept. 22-​23, 2014 in London, England, and our next Crane'​s Money Fund University is scheduled for Jan. 22-​23, 2015, in Stamford, Conn. We hope to see you in Boston in June!

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