State Street Fund Connect

Transcription

1 State Street Fund Connect Adapting To Change: The Power of Portals Gregory P. Fortuna, CFA Managing Director

2 Agenda What s Changing How Do Portals Adapt New Products Other Key Factors

3 What s Changing MMF Regulatory Summary

4 Compliance Timeline 60 days 9 months 12 months 18 months 2 years October 14, 2014 August 14, 2014 July 14, 2015 October 14, 2015 April 14, 2016 October 14, 2016 FINAL RULES ARE POSTED TO THE FEDERAL REGISTER RULES BECOME EFFECTIVE FORM N-CR Compliance date WEBSITE DISCLOSURES Historical data must begin to be tracked in order to comply with the April 14, 2016 effective date Form N-MPF Diversification testing Stress testing Form PF Website disclosures FLOATING NAV LIQUIDITY FEES & REDEMPTION GATES

5 SEC MMF Reform Requirements 1 Floating NAV Institutional Prime Money Market (no impact to Retail nor Institutional Government, Treasury, and Tax- Exempt) Floating NAV based on current market value of securities in portfolio Rounding to the 4 th decimal Fees and Gates SEC has recommended the implementation of liquidity fees and redemption gates if a fund s level of weekly liquid assets falls below certain thresholds (30% and 10%) Boards have discretion over imposing gates and fees Enhanced Disclosure Money Market will be required to disclose daily online: Levels of daily and weekly liquid assets Net shareholder inflows or outflows Market-based NAVs per share Imposition of fees and gates Any use of affiliate sponsor support 1. Securities and Exchange Commission. Money Market Fund Reform. sec.gov/rules/final

6 Money Market : In Scope Money Market Fund Type Floating Net Asset Value ("NAV") Liquidity Fees Redemption Gate Liquidity Testing Form N-MFP 10% Test 30% Test Website Disclosures Form N-CR Institutional Prime Fund Institutional Municipal Fund (Tax-Exempt) Retail Prime Fund Retail Municipal Fund (Tax-Exempt) Government Money Market Fund * * * Government Money Market are permitted, but not required to impose a Liquidity Fee or Redemption Gate

7 Fees and Gates Details The Details Liquidity Fees A MMF Board can choose not to impose the fee, or to impose a lower fee, if it would be in the best interest of the fund not to do so. The liquidity fee is charged on redemptions and becomes part of fund assets. The Details Gates A money market fund that imposes a gate would be required to lift that gate (a) within 10 business days (although the board of directors could determine to lift the gate earlier) and (b) if and when weekly liquid assets exceed 30% of total assets. Money market funds would not be allowed to impose a gate for more than 10 business days in any 90-day period.

8 Enhanced Disclosure Details Daily website disclosure (as of end of prior business day) New Form N-1A (Registration Statement) Disclosures % of total assets in daily and weekly liquid assets Inflows and outflows Chart or graph inflows and outflows for past 6 months NAV to 4 decimal places Chart or graph changes to NAV over past 6 months Require each money market fund to disclose in its SAI historical instances in which the fund has received financial support from a sponsor or fund affiliate Disclosure of: (i) certain of the risks associated with liquidity fees and gates and/or a floating NAV; (ii) historical occasions on which the fund has considered or imposed liquidity fees or gates.

9 How Do Portals Adapt Using Tools That Can Add Value

10 Issue Fees and Gates Solution Will a Fee or Gate be Implemented? Portal Value Daily and Weekly Liquidity Ratios provided on screen and in reports so funds can be easily tracked Track all of your funds on one screen in one place What if a Fee is Implemented or a Gate Dropped? Portal Value Portal to provide instant notification of any fee or gate. If fund has a fee: When executing trade Portal to provide indication of fee amount before trade. displayed on screen clearly indicating if a fee or gate is currently in effect

11 Issue Floating NAV Solution Tax Reporting Portal Value Portal to provide report with gains and losses Track gain/loss activity in multiple funds in one place Due diligence/performance and risk Portal Value Portal to provide tool to track multiple funds NAV s Portal to track multiple closings per day Portal as tool to run historical checks across multiple funds

12 Sample Timeline Multiple Closings NAV #1 Deliver 9:00 AM NAV to TA NAV #2 & WIRE DEADLINE 9:00AM REDS/ FUND VALUATION Deliver 12:00 PM NAV to TA NAV #3 & WIRE DEADLINE 12:00PM REDS/ FINAL FUND VALUATION Deliver 3:00 PM NAV to TA FED WIRE DEADLINE 4:00 AM 7:00 AM 9:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00PM 6:00PM 6:30PM Fund valuation and NAV calculation Fund valuation and NAV calculation Fund valuation and NAV calculation FINAL REPORTING - NAV, TNA, Rate, and yield Fund activity is continually processed For Illustrative Purpose Only

13 Issue Multiple Trading Windows Solution How many closings a day? What Time? Portal Value Portal to aggregate all funds and clearly display trading times and widows for each Portal automate the posting of NAV as soon as it is struck Portal will facilitate multiple trading windows that align with Fund s intraday NAV strikes including support of T+1 trades Intra-day Balances Portal Value Portal to provide Intraday balances based on most recent strike price Portals to handle share and currency trades and provide clients notifications if potential overdraft in account

14 Issue Enhanced Reporting and Notification Solution Need to Track Liquidity Portal Value Notification and alert tools can be set to notify when funds drop below certain % Portal home page clearly display % Need to be alerted what NAV for each trade Portal Value Since NAV will come well after trade placed, Portal will provide real time notification as soon as NAV struck Need to be alerted intraday cut-off times Portal Value Portal can provide users 15 min. prior alerts that cut-off time is approaching

15 New Products Portals Ready To Adapt To New Products

16 Current World Stable NAV Floating NAV 2a-7 Treasury 2a-7 Govy. 2a-7 Retail Prime 2a-7 Instit. Prime Ultra short Bond Short Bond Risk/Return XYZ Style = Exist Today For Illustrative Purpose Only

17 New World Stable NAV New Floating NAV Floating NAV 2a-7 Treasury 2a-7 Govy. Max 7, 30, 60 Day 2a-7 Retail Prime Private Placement 2a-7 Instit. Prime Ultra short Bond Short Bond Risk/Return XYZ Style = Exist Today XYZ Style = In Development For Illustrative Purpose Only

18 Other Key Factors What to look for when picking a portal

19 Transparency: Giving you the tools to evaluate Duration analysis Maturity (WAM/WAL) Rating

20 Ability to integrate with multiple client systems Your Treasury Workstation Your ERP i.e. SAP State Street Fund Connect Outside Report Tool i.e. Clearwater Your Cash Settlement Bank Your Custodian Bank Ability to send all major message types And have all major financial institutions Accept our messages

21 Disclaimer 2016 State Street Corporation. State Street Global Markets, Global Link and Fund Connect are registered trademarks of State Street Corporation or its affiliates. This document is a general marketing communication. It is not intended to suggest or recommend any investment or investment strategy and does not constitute investment research. This document is intended for distribution to professional investors and is not directed at retail customers. Depending on a professional investor s jurisdiction or origin, products and services outlined in this document are offered to professional investors through one or more of State Street Global Markets International Limited and State Street Bank Europe Limited, which are authorized and regulated by the Financial Conduct Authority in the United Kingdom, State Street Global Markets, LLC, which is a broker dealer registered with the U.S. Securities and Exchange Commission and a member of FINRA and SIPC, State Street Bank and Trust Company and/or their affiliates. The products and services may not be available in all jurisdictions. This document and the information herein does not constitute investment, legal, or tax advice and is not a solicitation to buy or sell securities or intended to constitute any binding contractual arrangement or commitment by State Street to provide securities services or any other services. State Street hereby disclaims all liability of any kind, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either directly or indirectly, from or in connection with the use of or reliance on this document and/or the information herein. GM-0413