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A website called LeapRate.com published a brief entitled, "ESMA consults on Money Market Fund rules." It says, "The European Securities and Markets Authority (ESMA) has published a Consultation Paper (CP) on the Money Market Funds Regulation (MMFR). The CP contains proposals on draft technical advice (TA), draft implementing technical standards (ITS), and guidelines under the MMFR. The key proposals relate to asset liquidity and credit quality, the establishment of a reporting template and stress test scenarios." We review this article, ESMA's paper, and a new Fitch update on European money funds, below. (Note: Just another reminder to register ASAP for our upcoming Money Fund Symposium, June 21-23 in Atlanta, and to mark your calendars for our next European Money Fund Symposium, Sept. 25-26 in Paris, France.)

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Prime money market fund assets continued their modest but relentless recovery in the latest week, rising for the 5th week in a row. They're on course to also rise for the 5th month in a row in May, and they've increased by $28.0 billion, or 7.2%, year-to-date. ICI's latest "Money Market Fund Assets" report shows Prime assets rising (barely) by $0.2 billion to $406.8 billion. Our Money Fund Intelligence Daily shows Prime MMFs up by $10.3 billion month-to-date in May (through 5/24/17) to $535.5 billion. (Note: Crane Data's collection is now larger than ICI's due to the addition of a number of internal and private money funds uncovered by the SEC's Form N-MFP reporting. See our Jan. 3, 2017 News, "Internal and Private Money Funds Revealed," for more details, or contact us for a more detailed explanation and for a list of the funds we've added over the past few months.)

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The U.S. Securities and Exchange Commission released its latest "Money Market Fund Statistics" summary this week. It shows that total assets were down slightly (-$12.7 billion) in April, with Prime funds rising for the 4th month in a row, gaining $9.8 billion (after gaining $12.1B in March). Tax Exempt MMFs lost $2.5 billion and Government funds lost $19.9 billion. Gross yields rose for both Taxable MMFs and Tax Exempt MMFs following the previous month's Fed hike. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review the SEC's latest recap below.

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Earlier this week, we briefly mentioned the introduction of "H.R.2319 - Consumer Financial Choice and Capital Markets Protection Act of 2017 (see our May 22 News), a bill that could roll back the floating NAV portion of money fund reforms. We finally located the text of the latest bill (with help from a reader), and excerpt from it below. While the bill's odds of passing are unclear, it appears that it would substantially roll back the 2016 money fund reforms by allowing floating NAV money market funds an option to return to amortized cost accounting, the foundation of the "stable" NAV. We'll be watching developments closely in coming months. (See also our March 8, 2016 News, "Long Shot Legislation Could Keep All Money Funds Stable, Ban Bailouts.")

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Last week, the Investment Company Institute published a study on fund expenses entitled, "Trends in the Expenses and Fees of Funds, 2016." It says, "The average expense ratios for money market funds rose 5 basis points in 2016 to 0.18 percent. This was indirectly related to the Federal Reserve raising short-term interest rates in December 2015, which prompted fund advisers to begin paring expense waivers that most money market funds offered during the period of near-zero short-term interest rates that had prevailed in the post–financial crisis era."

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Last week, the New England AFP (Association for Financial Professionals) hosted their Annual Conference in Boston, and no fewer than 8 of the sessions focused on cash investing and money market mutual funds. Crane Data attended and exhibited, as did most of the major institutional money fund providers. (The spring conference season of regional Treasury management shows continues next week in Chicago with the Windy City Summit and the following week with the New York Cash Exchange, respectively.) The main topics involved in many of the presentations we saw (and people will see over the next few weeks) included whether investors will return to Prime money funds in force, which of the alternatives to Prime are gaining traction or poised to bring in assets, and a number of other cash management and investing topics. We review some of the sessions below, and we also remind people to register ASAP for next month's Money Fund Symposium (June 21-23 in Atlanta).

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This month, Bond Fund Intelligence speaks with Steven Brown and Kris Dorr, Portfolio Managers for Guggenheim Limited Duration Fund (GILHX) and Guggenheim Enhanced Short Duration ETF (GSY). We discuss issues in the ultra-short space, as well as Guggenheim's recent growth. Our Q&A follows. (Note: This "profile" is reprinted from the May issue of BFI. Contact us if you'd like to see the full issue or if you'd like to see our new Bond Fund Portfolio Holdings "beta" product, which ships to subscribers Monday.)

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As we mentioned in yesterday's "Link of the Day," the European Union has formally approved changes to money market fund regulations which will impact funds domiciled in Ireland, France and Luxembourg when they go into effect at the end of 2018. Today, we excerpt from a couple of articles on the changes, and quote from the latest version of the rules. The Wall Street Journal explains in "Corporate Treasurers Assess Impact of European Money Market Fund Reform," "Corporate treasurers are taking stock of their cash holdings in preparation for new European Union money market fund rules. The European Council, one of the main EU decision-making bodies, on Tuesday approved reforms that impose stricter liquidity requirements and limit redemptions on money-market funds."

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This month, our Money Fund Intelligence newsletter speaks with Denise Latchford, Senior Portfolio Manager and Director of Money Markets for American Century. We discuss the return to "normalcy" in the money markets, as well as a number of other money fund related issues. Our Q&A follows. (This interview is reprinted from the May issue of our flagship Money Fund Intelligence newsletter; e-mail info@cranedata.com to request the full issue.)

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The Investment Company Institute released its latest monthly "Money Market Fund Holdings" summary (with data as of April 30, 2017) yesterday. This release reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. The MMF Holdings release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in April, prime money market funds held 25.2 percent of their portfolios in daily liquid assets and 43.6 percent in weekly liquid assets, while government money market funds held 58.9 percent of their portfolios in daily liquid assets and 77.1 percent in weekly liquid assets." Prime DLA fell from 29.5% last month and Prime WLA fell from 44.3% last month. We review the ICI's latest Holdings update, along with J.P. Morgan's Taxable money market fund holdings update, below, and we also cite a new white paper from Treasury Strategies on Money Fund Regulations' Winners and Losers.

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A number of strategists wrote last week on the tightening of the LIBOR-OIS spread, the difference between the London Interbank Offered Rate (LIBOR) and the Overnight Indexed Swap (OIS) rate, which normally indicates falling risk in money market securities. Bank of America Merrill Lynch, in a piece entitled, "LIBOR-OIS has rapidly tightened," explains, "The 3-month LIBOR-OIS spread has sharply tightened by over 22bp since early-February to levels last seen since prior to the Fed's December 2015 rate hike.... The recent narrowing is due to a reduced supply of 3m unsecured funding, stabilization in investor demand, and underlying issues with LIBOR." We excerpt from BofA Merrill's piece, as well as briefs from Citi and J.P. Morgan Securities below.

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The May issue of Crane Data's Bond Fund Intelligence, which was sent out to subscribers Friday, features the lead story, "ICI 2017 Fact Book Reviews Bond Fund Trends: Good Year," which reviews the bond fund-related portions from ICI's annual report on mutual funds. BFI also includes the "profile" article, "Guggenheim's Brown & Dorr on the Short Duration Sector," an interview with Steven Brown and Kris Dorr, Portfolio Managers of Guggenheim Enhanced Short Duration (GSY) and Guggenheim Limited Duration (GILHX), respectively. In addition, we recap the latest Bond Fund News, including the brief, "Yields Down; Returns Up in April." BFI also includes our Crane BFI Indexes, averages and summaries of major bond fund categories. We excerpt from the latest issue below. (Contact us if you'd like to see a copy of our latest Bond Fund Intelligence and BFI XLS data spreadsheet, and watch for our latest Bond Fund Portfolio Holdings "beta" product later this month.)

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