| SEC relief for US funds; Asset-backed CP, "Battle for bps" discussed at MMX 02 |
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| 19/03/2002 | |
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by Nat Mankelow The Securities and Exchange Commission (SEC) is considering proposals to allow money fund providers to invest in their own vehicles, according to iMoneyNet research. At present, SEC looks at each US-based fund case-by-case and bases its decision on whether permission can be granted using exemptive orders contained in the Investment Company Act 1940. Frank Russell and Commonfund Institutional Funds were both granted permission to put their cash in affiliated funds, based on exemptions from Sections 12 (d) (1) (A) and (B) and Section 17 of the Investment Company Act. These orders give the green light to open-end investment firms to use uninvested cash to buy shares of one or more affiliated MMFs, and trade if desired. Other funds receiving exemptive orders during the past six months include ARK, Huntington, Dreyfus, Fidelity and INVESCO. No timetable has been set for bringing up the proposed rule change for SEC review, but US sources indicate it could start next month. MMX 2002 The IBC Conferences/iMoneyNet 4th annual Money Market Expo earlier this month saw 230 finance professionals attend presentations and debates on topics such as downgrades and defaults, the growth of asset-backed commercial paper (ABCP), alternative distribution strategies, and – of relevance to the institutional MMF market in the UK and Europe – the growth of offshore money funds. The viability of repurchase agreements, T-bills and commercial paper within a fund's portfolio was also keenly debated. Moody's, the ratings agency, argued that growth in ABCP, from seven percent of the CP market 10 years ago to over 50 per cent in 2002, was something to be commended. However, concerns were expressed about securitisation "getting caught up in the fallout from Enron". "Who wants to be a money market millionaire?" – sadly minus an MMF-equivalent of Chris Tarrant – on the second day of the conference was immediately followed by a presentation called "The Battle for Basis Points", which looked at how providers can squeeze the best from a fund in a low interest rate/prices climate. The offshore money fund panel discussed the differences of selling into different countries, along with what expertise and intangibles corporate treasurers were looking for in a money fund provider. |
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