by Helen Sanders, Editor
In March 2009, Travis Barker, Head of Business Development for HSBC’s money market funds business was appointed as Chairman of IMMFA (Institutional Money Market Funds Association). In this interview, we talk to Travis about his thoughts on the past year and IMMFA’s plans for the future.
How would you reflect on the financial markets over the past year?
It’s been a tough year! The failure of Lehman Brothers and the ensuing crisis had two consequences for money market funds.
Firstly, it led to an extraordinary contraction in liquidity in the instruments in which we invest. This reaffirmed the crucial importance of liquidity management, on both sides of a money market fund (MMF)’s balance sheet: on the asset side by ensuring appropriate levels of natural maturity; and on the liability side by managing shareholder concentration risk.
Secondly, the year also witnessed the failure of a US money market fund managed by The Reserve Management Corporation. This was a timely reminder to investors that money market funds are not risk free and, indeed, different funds exhibit different levels of risk. Investors are now more attentive to their fund provider’s credit process and asset portfolio.