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Omnibus Transparency to Help Money Market Reform Issues

Omnibus Transparency to Help Money Market Reform Issues

In the recent Ingites article, “BlackRock: Bring On Gates, Stress Tests for Bond Funds“, Blackrock is suggesting more omnibus transparency to help guard against fixed income market liquidity shortages. This all has to do with the MMR (Money Market Reform) issues the fund industry is currently dealing with. They are suggesting policymakers could create guidance requiring TAs, distributors or some other entity to aggregate info on investor types in a fund to help forecast future redemptions. They indicate knowing whether the assets are retirement assets and the type of account in markets where rebalancing rates may differ by account type would be helpful. In looking at the original Blackrock paper this article was derived from, they indicate in a footnote that they don’t need client level information to be able to utilize this information.

We note that transparency to individual client level information would not be useful or needed to implement this recommendation.”

So to us, it sounds like if the funds knew that in any fixed income fund if they knew how many assets were in 401K plans, IRAs, retail accounts, etc then they could better predict what the redemption rates might be in case of a “market crisis” and therefore better evaluate the funds ability to liquidate assets effectively to meet the redemption demands a market crisis would bring. Their suggestion of possibly having a central data repository would probably be the DTCC. Blackrock is the world’s largest money manager, so they carry a lot of influence. It will be interesting to see how this evolves and whether or not a central repository of account holders in money market funds evolves. I have pasted below the article a listing of the world’s top 10 money managers as of 12/31/13.

The P&I/Towers Watson World 500: World’s largest money managers

Pensions & Investments | November 10, 2014

The P&I/Towers Watson World 500: World’s largest money managers

Ranked by total assets under management, in U.S. millions, as of Dec. 31, 2013.

Rank

Manager

Country

Total assets

1

BlackRock (BLK)

U.S.

$4,324,088

2

Vanguard Group

U.S.

$2,752,919

3

Allianz Group

Germany

$2,392,531

4

State Street Global

U.S.

$2,344,789

5

Fidelity Investments

U.S.

$2,159,845

6

J.P. Morgan Chase

U.S.

$1,601,983

7

Bank of New York Mellon (BK)

U.S.

$1,582,982

8

AXA Group

France

$1,532,156

9

Capital Group

U.S.

$1,338,805

10

BNP Paribas

France

$1,325,176

Burton Keller

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