by Mark Stockley, Head of International Cash Sales, BlackRock
In recent years, financial regulators across the world have introduced amendments to legislation that have affected virtually every area of the markets. These changes have had a major impact on the work of treasury practitioners in both domestic and multinational corporations.
One area to be particularly affected is the practice of investing a corporation’s cash in triple-A rated stable, or constant net asset value money market funds (CNAV funds). Globally, CNAV funds have been subject to regulatory or industry-led amendments that we believe have strengthened the product model and reinforced its relevance to corporate investors as a source of diversification, credit quality and daily liquidity. At the same time, they have maintained their contribution to economic growth via their intermediating function of bringing together institutional borrowers (issuers of short-term debt) and lenders (investors in money market funds).
While regulators will undoubtedly continue to pay close attention to CNAV funds, we believe that the changes made so far are adequate to preserve their importance to the cash investing community and the wider economy. Therefore, we suggest that regulators pause in their analyses in order to adequately assess the impact of changes made so far. We also encourage corporate treasurers who are comfortable with money market funds to express their views to their local regulators to help mitigate further change that may be unnecessary and detrimental.