13 min readAs the SEC’s MMF rule amendments come into effect in October 2023, investors looking to return to institutional prime funds may want to be aware of the pros and cons of these changes. DOWNLOAD REPORT Introduction Three years after a Covid-induced market panic that caused runs on prime money market funds (“MMFs”), the Securities and…
13 min readAs the market’s attention was drawn to the war in Ukraine, supply chain disruptions, runaway inflation, and higher interest rates, a significant deadline quietly passed. April 11 marked the end of the comment period for the new round of money market fund (MMF) reforms proposed by the Securities and Exchange Commission (SEC). As the Fed…
3 min readHere we go again. As if Covid-19 hadn’t given us all enough to worry about, in March it precipitated a short-lived run on prime money market funds. By the end of the month, approximately $100 billion had drained from institutional prime money market funds—more than 30% of their total assets. For a minute, the 2008…
17 min readDOWNLOAD FULL REPORT Abstract The 2014 money market fund reform brought forth drastic change to the corporate cash management landscape, significantly impacting investors, issuers and fund sponsors. While there is little doubt that money market funds are more resilient following the implementation of the reform’s higher credit, liquidity, transparency, and oversight standards, it also had…
2 min readAbstract In the year since the SEC instituted new rules governing money market mutual funds, institutional prime funds have recaptured some lost ground, although balances still lag government funds. Fund characteristics returned to pre-reform levels with wide dispersions and concentrated exposures to non-US financial issuers. Asset-backed instruments also increased. While prime fund yields benefitted from…
4 min readOur panel session at this year’s AFP Conference on “Managing Liquidity in a Post-Reform World” came at an opportune time—just after new SEC regulations on institutional prime money market funds went into affect that have already started to dramatically transform the cash management landscape. So it was no surprise when much of the formal discussion…
2 min readAbstract An Industry at an Inflection Point – Outflows from prime funds have been more severe than forecast. Fewer funds and fewer fund companies are left in the prime space. While stable NAV government funds will likely continue to flourish, the appeal of prime funds has diminished. Diminished Yield Potential – The anticipated higher prime-to-…
1 min readAbstract Institutional prime money market fund investors may face a number of liquidity challenges after October 2016. Floating net asset values, potential fees and gates on redemptions and unpredictable institutional shareholder behavior during times of stress all present potential obstacles. Cash investors may be able to avoid these difficulties with direct investments in cash equivalent…
2 min readAbstract This commentary addresses a number of liquidity challenges concerning institutional prime money market funds after October 2016. The floating net asset values, the provision of fees and gates and the institutional shareholder syndrome each presents a unique set of challenges. The reformed institutional prime product can remain viable for a certain population of current…
2 min readMoney market fund reforms, new banking regulations, and the prospect of rising interest rates are motivating a top-to-bottom restructuring of many corporate cash portfolios in 2015 and 2016. As corporate treasurers strike a new balance of bank deposits, reconstituted institutional money market funds, and separately managed portfolios of directly purchased short-term securities, we expect to…