federated money market fund reform
TRANSCRIPT
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Stability Investment Solutions Diligence
Money Market Fund Reform
Dennis Gepp
Managing Director & Chief Investment Officer- Cash
John arker
Director
Federated Investors !"#$ %%
CIPFA Scotland Public Finance Conference, 6-7 March 2014
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he hree Ru'es of (ork))
Out of clutter, find simplicity;
From discord, find harmony;
In the middle of difficulty lies opportunity.
- Albert Einstein
*
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Overvie+
The European Commission has published a comprehensive
Money Market Fund reform proposal
Enhances MMF portfolio liquidity, transparency, credit quality(which we agree with
Makes MMF sponsors choose between placing !" in capital
reserve or moving to #ariable $et %sset #alue (#$%# in&ecember ')*
,
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genda !or. +hat +e +ou'd 'ike you to go a+ay +ith today$
+utting things into contet--
. /hy are regulators seeking to make changes0
. Main European Commission proposals
. +otential timings
. /hat could this mean for MMF users0
. /hat might this mean in terms of risk0
. /hat is Federated 1nvestors2 view0
. /hat is Federated 1nvestors doing about it0
. /hat should investors consider doing about it0
/
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(hy are the Regu'ators seeking to make changes0
The Credit Crisis of '3 underlined the need for greater regulation of the
Financial 1ndustry
European Money Market Funds are an integral part of the financial system
Minimise potential for Fund 4runs5
6elief that Constant $et %sset #alue (C$%# funds are at greater risk of a 4run5-despite
evidence to the contrary
6elief that C$%# funds are seen to be 4guaranteed5
To ensure MMFs remain resilient even in times of etreme market stress and disruption
1
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Main 2uropean Commission roposa's !as at March *34/$
Creation of two categories of MMFs
5short7term MMFs5 (may be C$%# (until ')8 or #$%#
4standard MMFs5 (must be #$%#
C$%# MMFs to have capital buffer of !"999
for : years from &ecember ')*
thereafter mandatory conversion to #$%#
(Fuller list of proposals in %ppendi
5
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otentia' iming
;nlikely to be decided in this European parliament(new Elections in May ')*
7 in the unlikely event of these proposals being accepted in
this parliament thencom
John arker
Director
3*3 6547 *536
?parker=federatedinv>com
48
F e d e r a t e d I n v e s t o r s ! " # $ % %
f ede ra ted i nves to r s . co .uk
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