Asset managers overhaul money market funds after March rout
Joseph Abate, a managing director at Barclays, expects increased scrutiny over the size of the funds’ liquidity buffers, holdings and the eligibility of investors.
There could be more immediate effects, too, if fund closures curtail a vital source of short-dated financing for companies. The commercial paper market — where companies borrow for up to 12 months, and where prime money market funds are among the largest players — was rescued in March when the Fed set up a special purchasing programme to stave off a funding crunch. The US central bank also launched a facility that made loans to banks secured by assets from money market mutual funds, in order to ensure that they could meet demands for redemptions.
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