Waters on Goldman's Tools
Waters Technology, which publishes articles on technology in the financial services industry, writes, "Facing New Requirements, Money Market Funds Respond with Tracking, NAV Drill-Down Tool." It reads, "Money market funds, along with mortgage securitization, have proven one of the last frontiers of post-crisis operational and regulatory reform.... [C]hanges to the framework governing these funds -- SEC Rule 2a-7 -- have been purposive rather than rapid; the first wave came in 2010, the next is set to be implemented in fall of 2016. Easing in new requirements, rather than rushing them, has allowed managers to adapt. And many, like Goldman Sachs Asset Management (GSAM), which offers nine such funds, have used their time to develop new technology to help clients cope. Goldman's head of global liquidity sales and European institutional sales, Kathleen Hughes, says clients need particular help getting used to newly-introduced variable net asset value (NAV) pricing, as they evaluate their choices differently and think about the product in a different construct, both in terms of minimum liquidity amounts as well as other transparency measures." "Through speaking to policymakers on behalf of our clients, but also speaking with clients directly, we have developed a good body of knowledge about what their worries are, and what features they want preserved to maintain the utility of the product," Hughes comments. She adds, "All of this has lead us to building new tools." The article continues, "The way the changes to the rules have been released allows for a couple of different options for money market fund users.... If there is a client who absolutely still wants to maintain a product that doesn't have a fluctuation in pricing and a constant NAV, there's the option of 'stable value' government and treasury funds," Hughes says. "There are still certain things to track with that, but from a holdings perspective there's less to do. If stable value pricing is important, there's that option." The article goes on, "The tools make it easier for corporates using GSAM funds to track multiple funds and stardardize for time series, while also allowing them to take holdings information, risk and exposures from third-party funds and run those through GSAM's calculation engine, providing treasury teams the ability to "apply an additional lens," as Hughes puts it. Even though October 2016 seems a long way away, Hughes and her team have been evangelizing about the new "forward looking" tracking tool early on. In part, she says. this is due to money market users coping with competing technology priorities. "We've seen clients really respond to this; they want these tools but have to put it in the queue. They might be overhauling their treasury workstation, putting new structures in places, or adding a new clearing bank. There are always major projects happening, and we simply have to help them slot this in."
