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more links »Fitch Europe Money Market Fund Primer
A press release posted on Nasdaq.com says, "Fitch Ratings has released a primer for investors on European Money Market Funds (MMFs) which provides clear and key insights into the EUR1.3trn sector, as well as explaining how different funds operate and the risks they present among other factors. The primer, which is presented in an easy-to-navigate question and answer format, aims to answer investors' questions about money market funds, such as who bears the risks, the differences between MMFs and other cash instruments, and which risks are embedded in such funds among other pointers. In addition, Fitch provides additional information explaining how the agency rates money market funds, and on its new MMF rating scale introduced in October 2009." Aymeric Poizot, head of Fitch Ratings EMEA Fund and Asset Manager Ratings group says, "Fitch provides MMF ratings to help investors compare between funds and distinguish between true/traditional money market funds and so-called liquidity plus or enhanced cash funds whose risk profiles may be more akin to short-term bond funds.
Federal Register Version of SEC's Money Market Fund Reforms Posted
The more printer-friendly (62-pages) Federal Register version of the SEC's Money Market Fund Reforms was recently posted on the SEC's Final Rules web page. Also, the New York Federal Reserve, which yesterday issued its "Statement Regarding Counterparties for Reverse Repurchase Agreements," added a clarifying document, "RRP Eligibility Criteria for Money Funds: Frequently Asked Questions." A couple of the Q&A's include: "Does the $20 billion net assets requirement apply to the money fund or the fund family? The net asset requirement applies to the RRP counterparty applicant, which is the money market fund itself. As stated in the RRP Eligibility Criteria for Money Funds, to be accepted as a RRP counterparty, an applicant must, among other things, be a money market fund that satisfies the description set forth in Section I(A) and have net assets of no less than $20 billion for six consecutive months (measured at each month-end) prior to the submission of the application.... Will a seven-day put option be provided to money market funds who become RRP counterparties? Yes. As stated in footnote 4 in the RRP Eligibility Criteria for Money Funds, it is contemplated that for RRP with terms exceeding seven days, the RRP counterparty will be permitted to resell the securities to the New York Fed upon seven days prior notice. The specifics of this option will be provided in the New York Fed's Master Repurchase Agreement for money market funds, which the New York Fed expects to publish in about a month."
"Money Funds Welcome Repo Shift"
The Wall Street Journal writes "Money Funds Welcome Repo Shift". It says, "The New York Federal Reserve has at least three -- and probably many more --willing potential partners as it plans to expand the tools used to control liquidity in financial markets. Vanguard Group, Fidelity Investments and Federated Investors on Monday welcomed the New York Fed's announcement that it will expand the counterparties, starting with money funds, with which it conducts reverse-repurchase agreements." The Journal quotes Vanguard Group's David Glocke, "We would enthusiastically want to take a look at these transactions for our portfolios. It's a great alternative to other transactions that we already do." The piece continues, "Money-market funds applying to act as counterparties must have net assets of no less than $20 billion for six consecutive months, have been in existence for at least one year and be a consistent investor in the tri-party repo markets, according to the New York Fed's eligibility criteria.... Others in the $3.1 trillion money-fund industry are likely to be cheered by the prospect of deals with a party as trusted as the Fed. The supply of safe assets in which money-market funds can invest has dwindled during the financial downturn, and plans for tighter rules on just how money-market funds can invest are likely to make liquid assets even more scarce. Access to the 'reverse repos' will actually help money funds comply with the new Securities and Exchange Commission rules, said Peter Crane, president of Crane Data LLC, 'As those go into effect, there's going to be even more of a thirst for liquidity.'" See also, New York Daily News' "Government to institute new standards that may make money-market funds safer for investors".