It Will Be an Autumn to Remember

As 2009 draws to a close, many of us in the corporate treasury world will likely feel this is an easy year to leave in our rear view mirror. With the lingering effects of the credit crisis and ensuing recession The summer of ’09 at Capital Advisors Group has been anything but quiet. Our firm is in a growth phase because we see good things on the horizon and we’re gearing up for what we expect to be an even busier fall as we begin to work through this moderate economic recovery and see slight improvements in the credit markets. While we are optimistic, the question for many remains: “What’s next?” Here’s what appears to be certain:

1. Rates and yields will remain low for the foreseeable future
2. Re-regulation will reign in the financial markets for the next 12-24 months
3. The rules that govern money market funds will change…for better or for worse

This month’s newsletter focuses on the third point listed above because of its timeliness. In a matter of just a few short weeks the SEC, with input from the President’s Working Group on Financial Markets, will hand down to the money fund industry amendments to the industry’s governing Rule 2a-7. As a result of this step we can be certain of one thing: the industry will never be the same after this fall. Whether the rules changes will help or hamper the industry is yet to be seen and a healthy debate is roiling among industry insiders.

Several members of our firm attended Crane Data’s first annual Money Fund Symposium in late August and witnessed the debate first hand. The impending rules changes dominated the conversation with perspectives from fund managers, institutional investors, industry consultants and even the SEC itself. It was a timely forum that fueled a fascinating dialogue during this uncertain period for the industry. To read a recap of the event please click here.

Needless to say, it’s going to be an interesting autumn. As we track the general improvement in the economic and credit environments, we’ll also be watching closely to see how these regulatory changes to money funds may redefine their role in many corporate cash investment portfolios.

Best Regards,

Ben Campbell
President & CEO