by Justin Meadows, Founder and Chief Executive, MyTreasury
As the use of MMFs has grown and treasurers have found themselves setting up accounts with multiple fund providers, there has been an accompanying increase in the level of interest in the use of MMF trading platforms. It is now widely recognised that these portals provide a convenient single gateway for treasury investors to access and trade their fund accounts electronically across all their fund providers; they also deliver significant benefits compared to the traditional methods of trading MMFs by phone or fax. However, due to the information (and sometimes misinformation) overload accompanying the rapid increase in the market for MMF platforms there is a real risk of potential users making a platform choice without being fully or properly informed.
As the costs of doing this can be high it’s worth taking the time and effort to ask platform providers the following 10 apparently simple questions, which actually reveal some quite fundamental differences between the platforms and their suitability for your treasury trading. If you don’t get answers, or sufficient evidence to back up any answers you do receive, it’s probably best to assume the worst!
1. What kind of portal will I be using?
MMF platform terminology can be quite confusing as the various providers can use the same terms in different ways. The key distinction is between omnibus platforms where the portal provider is the fund account holder and trades on behalf of investors, and fully-disclosed or direct portals where investors hold their own accounts directly with their fund providers. Whilst this may seem to be pretty straightforward it is actually quite difficult to be completely clear about what you’re going to get, and you may need to dig a little beneath the surface.
MMF platform terminology can be quite confusing as the various providers can use the same terms in different ways.