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".

Email This Article




Use a comma or a semicolon to separate

captcha image

Daily Link Archive

2024 2023 2022
March December December
February November November
January October October
September September
August August
July July
June June
May May
April April
March March
February February
January January
2021 2020 2019
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2018 2017 2016
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2015 2014 2013
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2012 2011 2010
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2009 2008 2007
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2006
December
November
October
September