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Money Market Reform

 
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Northern Trust announces updates to money market fund lineup

Effectively managing cash can be challenging, and even more so in light of the impending regulatory reforms in the money market fund landscape. As one of the world’s largest cash managers with approximately $96.8 billion in money market fund assets as of March 31, 2016, Northern Trust has been at the leading edge of the changing marketplace. Our foresight and conservative cash management approach have us well-positioned to serve our clients’ evolving needs as the new Securities and Exchange Commission (SEC) rules governing money market funds take effect.

At Northern Trust, we remain committed to thoughtful cash management – it is, and always has been, a key area of focus. Our global cash, ultra-short fixedincome products and money market funds currently offer retail and institutional investors leading-edge, client-focused cash management solutions.

NEW SEC RULES GO INTO EFFECT OCTOBER 14, 2016

Institutional funds

Under the new SEC rules, the three institutional funds will no longer use the amortized cost method of valuation to seek to maintain a constant $1.00-per-share net asset value (NAV). Instead, they must adopt a variable NAV that floats with the market price of the underlying securities, rounded to four decimal places. These institutional funds will also be subject to liquidity fees and/or redemption gates if their liquid assets fall below certain minimums and the fund’s Board of Trustees determines it is in the fund’s best interests.

Retail funds

The two retail funds will be permitted to continue to use the amortized cost method of valuation to seek to maintain a constant $1.00 NAV but must have policies and procedures reasonably designed to limit all beneficial owners to natural persons. Similar to the institutional funds, retail funds will also be subject to liquidity fees and/or redemption gates if their liquid assets fall below certain minimums and the fund’s Board of Trustees determines it is in the fund’s best interests.

Government funds

The five government funds will be permitted to continue to use the amortized cost method of valuation to seek to maintain a constant $1.00 NAV and must invest at least 99.5% of total assets in government securities, cash and/or repurchase agreements that are fully collateralized by government securities or cash. The fund’s Board of Trustees currently does not intend to adopt liquidity fees or redemption gates on the government money market funds.

CASH MANAGEMENT PRODUCTS

The SEC's Rule 2a-7 amendments recognize three fund types for money market funds – institutional, retail, and government. With a roster of 10 money market funds for investors, Northern Trust designated funds in each category based on our clients' needs:

Institutional funds

 

Retail funds

Government funds

¹Northern Institutional Funds Diversified Assets Portfolio is in the process of converting to a government money market fund, which will occur on or about September 30, 2016.

TO LEARN MORE

If you have questions about Northern Trust’s money market funds, please contact your relationship manager or visit northerntrust.com/funds.

 

Shaping the Next Generation of Liquidity Solutions

 
April 25, 2016 - Peter Yi, Director, Short Duration Fixed Income: As we approach the final phases of Money Market Reform, the industry has spent an incredible amount of time educating investors and refining product sets to shape the next generation of liquidity solutions.
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YOUR CASH MAY BE
COSTING YOU

Learn how investors are using segmentation strategies and ultra-short bonds to meet their cash needs without sacrificing growth.

View the infographic

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Investor Implications

What should investors know about the sweeping reforms for the money market mutual funds industry, and how does Northern Trust ultimately expect these new rules to affect the marketplace? Find out here.

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Reverse Repo

The timing and magnitude of prime and government money market mutual fund asset flows and any future interest-rate increases remain uncertain.

Read about Northern Trust’s view of the Federal Reserve’s Reverse Repurchase Program (RRP) and its potential effect on short-term rates.

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© 2017 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory information about individual market offices.

Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, and personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale investors only and should not be relied upon by retail clients or investors. Issued in the United Kingdom by Northern Trust Global Investments Limited.