Collateral: A Different Lens on Money Market Funds


Shaun Murray of Margin Reform has written a Whitepaper on Money Market Funds (MMFs) and how clients can utilise them to satisfy their IM obligations.

Within it, he reviews potential issues, types of funds that can used (EU) and how some solutions can be accessed and are likely to operate on a day-to-day basis.

A short excerpt from the introduction:

Money market funds are open-ended mutual funds managed with the goals of capital preservation, liquidity, and risk-adjusted returns, by investing in high quality short- term debt securities such as, government securities, reverse repurchase agreements, time deposits, certificates of deposits and commercial paper. They typically trade and settle on a same-day basis, which allows investors to meet their short-term liquidity requirements.

Investing in these funds allows investors to participate in diversified high-quality portfolio of eligible securities whilst receiving interest income in the form of dividends. European MMFs are categorised as either short-term MMFs or standard MMFs under EU Regulation 1131/2017 and must adhere to strict rules on liquidity, portfolio construction and duration. Additionally, many short-term MMFs are triple-A-rated by Fitch, Moody's and / or Standard & Poor's and can provide cash and cash equivalents status. They play an essential role in providing solutions for cash management and treasury functions across the investment landscape.

Download the full PDF (for free) with the link below