The overwhelming opposition to the SEC's Proposed Money Fund Reform floating NAV for Prime Institutional MMFs continues to grow. The latest addition to the "Comments on Proposed Rule: Money Market Fund Reform; Amendments to Form PF is from Michael A. Egenton, Senior Vice President, Government Relations, New Jersey State Chamber of Commerce. He writes, "Thank you for the opportunity to write to you on behalf of the New Jersey State Chamber of Commerce ("State Chamber") regarding our strong opposition to the proposal put forth by the Securities and Exchange Commission to force institutional prime and tax-exempt money market funds to abandon the stable $1.00 net asset value and "float" their per-share price (the "floating NAV")."
Egenton explains, "By way of background, the State Chamber is recognized as the independent voice of business in New Jersey. With a broad based membership ranging from the Fortune 500 companies to small proprietorships, representing every comer of the state and every industry, our member companies provide jobs for over a million people in New Jersey. For businesses throughout the State of New Jersey, MMFs are a preferred vehicle for cash management. Many companies are required, by law or by investment policy, to invest cash only in products offering a stable value. The SEC's floating NAV proposal, if implemented, would diminish investor choice, without achieving regulators' goals of improving the stability of financial system."
He adds, "The convenience and simplicity of the stable share price draw investors to MMFs. Removing these features would drive investors away and impair a critical source of financing for both the private and public sectors. For institutions dependent on public funding, the shrinkage in MMFs would result in higher financing costs and reduced resources for their mission. The strict risk-limiting regulation and prudent professional management of MMFs have produced a record of stability for 40 years. New regulations have made these funds stronger and more resilient since the financial crisis. I urge the SEC not to harm this vital source of cash management and public funding by requiring a floating NAV. Again, thank you for considering our views."
In other news, Crane Data, which has been publishing Weekly Money Fund Portfolio Holdings since late 2012 (primarily for a number of online money fund trading "portals"), will soon begin producing of "`Reports & Pivot Tables" on the mid-month version of this dataset. Weekly holdings are not required by the SEC, so the majority of retail funds still don't distribute this information to clients. Most institutional funds, though, distribute holdings at least twice a month. We briefly review our first demo set of reports below.
Our Weekly portfolio holdings collection currently tracks $943.6 billion in assets, or 39% of the $2.415 trillion we track on our monthly collection. Given the differences in universes between our monthly and weekly datasets -- the weekly is biased towards prime institutional funds -- we look at the 5 largest funds in both universes to examine portfolio changes from July 31 to August 16. The largest prime funds include: JP Morgan Prime MM ($106.3 billion), Fidelity Inst MM MMkt ($68.3B), JP Morgan US Govt ($62.2B), BlackRock Lq TempFund ($47.6B), Fidelity Inst MM Prm ($46.6B), Wells Fargo Adv Hrtg ($38.8B).
As of August 16, these 5 funds held an average of 20.5% in Repo, 20.4% in CDs, 19.7% in Treasury, 13.8% in CP, 12.3% in Agency, 8.7% in Other, and 4.7% in VRDNs. This compares to 19.2% in Repo, 20.4% in CDs, 20.1% in Treasury, 17.2% in CP, 14.6% in Agency, 6.5% in Other and 2.0% in VRDNs. The Top 10 Issuers among the 5 largest funds (as of 8/16) included: US Treasury (21.4%, $185.6B), Federal Home Loan Bank (7.7%, $66.7B), Deutsche Bank AG (3.9%, $33.9B), Sumitomo Mitsui Banking Co (3.0%, $26.3B), Bank of Nova Scotia (2.8%, $24.0B), Federal Home Loan Mortgage Co (2.7%, $23.6B), Societe Generale (2.6%, $22.7B), RBC (2.3%, $20.0B), Bank of Tokyo-Mitsubishi UFJ Ltd (2.3%, $19.9B), and Barclays Bank (2.3%, $19.9B).
