Funds unprepared for money market reform
22 September 2015 New York
Image: Shutterstock
US fund managers are unprepared and uncertain over the upcoming money market reform (MMR), according to a survey by SimCorp.
Affected funds must comply with the MMR rules on floating net asset value (NAV), liquidity fees and redemption gate rules by October 2016, including amendments to rule 2a-7. This rule will affect floating NAV, limit underlying holdings for money market funds and introduce liability requirements. It will also mean stress testing and affect disclosure and reporting.
In the online survey, 85 percent said they have ‘limited to no’ understanding of the Securities and Exchange Commission’s final ruling on 2a-7, while 75 percent admitted that their organisation is not properly prepared for MMR.
Only 23 percent said they are currently able to strike multiple NAVs during one day, and 19 percent receive alerts when daily liquidity dips to 10 percent or less.
Marc Mallett, vice president of product and managed services at SimCorp North America, said: "Stakeholders rely on their firm to make wise investment decisions on their behalf based on accurate numbers. Without them, the entire process becomes compromised."
The survey was conducted in a webinar hosted by SimCorp and KPMG and included 100 respondents from 58 different firms across North America.
Affected funds must comply with the MMR rules on floating net asset value (NAV), liquidity fees and redemption gate rules by October 2016, including amendments to rule 2a-7. This rule will affect floating NAV, limit underlying holdings for money market funds and introduce liability requirements. It will also mean stress testing and affect disclosure and reporting.
In the online survey, 85 percent said they have ‘limited to no’ understanding of the Securities and Exchange Commission’s final ruling on 2a-7, while 75 percent admitted that their organisation is not properly prepared for MMR.
Only 23 percent said they are currently able to strike multiple NAVs during one day, and 19 percent receive alerts when daily liquidity dips to 10 percent or less.
Marc Mallett, vice president of product and managed services at SimCorp North America, said: "Stakeholders rely on their firm to make wise investment decisions on their behalf based on accurate numbers. Without them, the entire process becomes compromised."
The survey was conducted in a webinar hosted by SimCorp and KPMG and included 100 respondents from 58 different firms across North America.
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