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Money Market Fund Regulatory Changes: The Impact of 2014 Regulations on Investment Policies

In July 2014, the U.S. Securities and Exchange Commission issued new regulations for  U.S.-domiciled money market funds (MMFs). These primarily impact Institutional Prime and Municipal MMFs as Government and U.S. Treasury MMFs (both retail and institutional) are exempt from these structural reforms. There is a two-year transition period to allow fund companies and investors time to adapt with implementation scheduled for October 2016.

Federated Investors’ corporate clients are asking how these regulations impact them: What is needed to “adapt” to these new regulations? And must our investment policies be revised? We asked Treasury Strategies, the well-respected treasury management consulting firm, to help our clients address this question.

This paper represents Treasury Strategies’ suggested approach for corporate investors who are currently permitted to use Institutional Prime and Municipal MMFs in their short-term investment portfolios. Of course, every situation is unique so we encourage you to consider how their approach suits your specific circumstances.

Public sector and non-profit institutions typically are subject to more restrictive investment guidelines than private corporations. While the ideas in this paper are directionally useful for them, they may not strictly apply.

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