SimCorp Survey Shows Managers Unprepared For Money Market Reforms

Sep 21 2015 | 12:55pm ET

A recent survey released by financial technology and software provider SimCorp has revealed U.S. and global fund managers are generally uncertain about - and unprepared for - pending reforms to money market accounts scheduled to come into force by the third quarter of next year.

Money market reform (MMR) will affect the U.S. and global fund managers holding U.S. funds, according to SimCorp. The amendments, part of the SEC’s response to the financial crisis, are predominantly related to Rule 2a-7 of the Investment Company Act of 1940. These changes mostly affect floating NAV, liquidity fees and redemption gates, diversification, stress testing, and disclosure and reporting, all of which will have technological and strategic impact on money market funds.

SimCorp’s survey, conducted during a recent webinar hosted by SimCorp and KPMG, polled 100 individuals from 58 different firms across North America. 

Highlights of the survey:

  • 85% of respondents claim to have limited or no understanding of the SEC's final ruling 2a-7
  • Only 23% are currently able to strike multiple NAVs during the day
  • Only 19% receive online alerts when daily liquidity is reduced to 10% or less
  • 75% state that their organizations are not completely prepared for MMR to go into effect

MMR compliance deadlines are as follows:

  • Stress Testing, Diversification, Form N-PF, Form N-MFP, and clarifying amendments - April 14, 2016
  • Floating NAV  - October 14, 2016
  • Liquidity Fees & Redemption Gates - October 14, 2016

"Stakeholders rely on their firm to make wise investment decisions on their behalf based on accurate numbers. Without them, the entire process becomes compromised," explains Marc Mallett, vice president, product & managed Services for SimCorp North America. New products, such as SimCorp’s Dimension, are designed to handle MMR parameters, offering integrated, real-time access to portfolio positions and P/L, and allowing managers to quickly apply liquidity fees or redemption gates, strike NAVs and run stress tests.

Founded in 1971, SimCorp provides investment and portfolio management software and services to the world's leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds, and wealth managers.

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