The second annual Crane's Money Fund Symposium, which began Monday afternoon in Boston, concludes this morning with sessions on FDIC Sweeps, Floating-Rate Money Funds, Online Portals, and Critical Questions on The New Rule 2a-7. Over 330 attendees, sponsors and speakers participated in the largest gathering of money fund professionals ever held, and the mood was surprisingly upbeat considering the continued zero-yield environment and the shifting regulatory landscape.
Recent evidence indicates that yields are inching higher and asset outflows are subsiding, and speakers revealed that an `impressive lobbying coalition has formed to fight the possibility of a floating rate NAV being mandated at some point in the future. (See the full text of ICI President Paul Stevens full speech, "The Seventh-Inning Stretch: The State of Play for Money Market Funds".)
Reuters covered the conference in Tuesday's "U.S. money funds cope with changes, wary of more," saying, "U.S. money market funds have been coping with a sweeping set of regulatory changes this year and are wary of more in the coming months. Persistently low interest rates, the European sovereign debt crisis and a tight supply of investments have intensified the headache for the $2.5 trillion industry, analysts and investors said on Monday at a conference here sponsored by research firm Crane Data LLC."
The article continues, "More changes will likely further restrict the types of securities that funds can buy and drive investors into alternatives like bank accounts to park their cash. For borrowers like local governments and banks, which rely on money funds to buy their debt, there are concerns that more stringent rules will likely pare demand and raise borrowing costs."
It says, "The Obama administration has a working group studying money market issues, which ICI's Stevens called 'the biggest potential game changer.' 'The idea of floating these funds' value is likely to be discussed in the President's Working Group report,' he said. Other looming industry issues include the reporting of 'shadow' net asset value (NAV) and fallout stemming from the recently enacted federal financial regulatory overhaul, analysts and investors said. In early 2011, a money market fund will have to report with a 60-day lag its per-share value, which can be fractionally above or below $1."
Reuters adds, "Despite the challenges for the industry, there have been bright spots, such as a modest pickup in yields from earlier this year and the containment of the European debt crisis in the wake of the release of the stress test results of the region's banks on Friday. Another sign that the worst for the industry may have passed was a lighter atmosphere at the conference, according to participants." "At least we are not dead," joked Alex Roever, short-term fixed income strategist at JP Morgan Securities, writes Reuters reporter Richard Leong.
Look for more coverage in coming days and in the August issue of Money Fund Intelligence. Copies of the Money Fund Symposium conference binder, which includes all the Powerpoints and attendee list, are available to new Crane Data subscribers.
