Share This Page

Money market mutual fund providers Fidelity, Federated to boost disclosure

| Saturday, Jan. 12, 2013, 12:01 a.m.

Fidelity Investments and Federated Investors Inc. will make daily disclosures of the values of money market mutual funds, cementing an industry shift to greater transparency in a product regulators say poses a threat to financial stability.

Fidelity, the biggest provider with almost $430 billion, will reveal the previous day's closing value for all of its funds beginning Wednesday, the Boston-based company said on Friday in a statement.

Federated will do the same for five funds that invest in commercial paper by Jan. 25, said Meghan McAndrew, a spokeswoman for the Pittsburgh-based firm.

Charles Schwab Corp. will start providing daily values later this quarter, the San Francisco-based firm said on Friday.

Companies managing $1.5 trillion in money fund assets, or more than half of the U.S. market, have introduced the change in the past three days, increasing pressure on the rest of the industry to follow.

Goldman Sachs Group Inc. was the first to take the step on Wednesday, followed on the same day by JPMorgan Chase & Co., BlackRock Inc. and The Bank of New York Mellon Corp.

“The companies are hearing from their client base, and investors who shop among different funds want them to be on a level playing field in terms of transparency,” said Michael Krasner, managing editor at money fund research firm iMoneyNet in Westborough, Mass.

Goldman Sachs' decision caught competitors by surprise and angered some, said people from three money fund providers who asked not to be named because they were not authorized to speak publicly on the matter.

The voluntary shift means that the industry has given away a bargaining chip in the ongoing fight over money fund regulation, the people said.

Regulators led by former Securities and Exchange Commission Chairman Mary Schapiro have worked to impose tighter restrictions on money funds since the September 2008 collapse of the $62.5 billion Reserve Primary Fund. Its closure triggered a wider run on funds that helped freeze global credit markets.

The SEC enacted rules in 2010 that introduced liquidity minimums, reduced the average maturity of holdings and set higher standards for credit quality.

Schapiro has since argued that funds are still prone to investor runs that can destabilize financial markets. Her plan to make the funds stronger would have required that funds either abandon their fixed $1 share price or adopt capital buffers to protect against losses and withdrawal restrictions to discourage rapid investor redemptions.

Money fund providers have argued that abandoning the $1 share price would destroy the appeal of the product.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.