The March issue of Crane Data'​s Money Fund Intelligence newsletter goes out this morning (​along with our MFI XLS, Crane Index and other monthly performance ranking products). The latest issue features the articles: "Final MMF Reforms Out: Funds Await Next Steps," "Looking for a Legg Up: The New Western Asset," and "Quotes on the Business of Money Market Funds." The monthly "News" also discusses the Crane Money Fund Indexes hitting new record lows, and asset outflows continuing from money funds. Money Fund Intelligence also features performance rankings and statistics on over 1,​300 money market mutual funds.

As we'​ve been discussing, The SEC released the full text of its final '​Money Market Fund Reform' rules last week, and the 220-​page text contained no surprises. MFI recaps the new rules and discusses what might happen next. Visit the SEC'​s Final Rules page to see the whole text, and note that a new version, "Rule 2a-​7 Amendments Adopted by SEC in February 2010 Marked to Show Changes from Previous Rule 2a-​7" has been posted. (​Watch for the more condensed Federal Register version to appear in coming days.)

This month, Money Fund Intelligence revisits Western Asset Management, the ninth largest money fund manager worldwide and the 10th largest in the U.​S. We interview money fund veteran and Lead Liquidity Portfolio Manager Kevin Kennedy, and Head of New York Operations & Client Service/​Marketing Michael Van Raaphorst. Look for excerpts from our "​profile" in coming days, or e-​mail info@​cranedata.​us for the latest issue.

Our Crane Money Fund Indexes continue to set record lows, though help from the ultra-​low yields may soon be on the way in the form of slightly higher Treasury and repo rates. The Crane 100 Index, an average of the 100 largest taxable money funds, had a record-​low 7-​day yield of 0.​04% as of Feb. 28. The Crane 100 had a 30-​day yield of 0.​05% as of month-​end, and a 1-​year return of 0.​19% through 2/​28/​10. Our broader Crane Money Fund Average yielded a mere 0.​02% (​7-​day annualized) and 0.​03% (​30-​day), respectively, at month-​end.

Below, we excerpt from an interview in our latest Money Fund Intelligence. The piece entitled, "Navigating New Rules: Q&​A w/​Stephen Keen," interviews the veteran Reed Smith LLP money market mutual fund attorney and partner about the current changes to, and history of, Rule 2a-​7 of the Investment Company Act of 1940, the body of regulation governing money market mutual funds.

We asked, "What would you say are the big changes in the current batch? Keen responds, "Liquidity is to this amendment what diversification was to '​91. The rule had not previously dealt with liquidity as a regulatory requirement. Even without diversification requirements to 2a-​7, funds were diversified.... It'​s not that funds didn'​t pay any attention to liquidity, that'​s always been an important part of management. But it'​s never been a regulatory requirement, and consequently it'​s never had a minimum standard."

He explains, "The rule is almost always -- you have to do what you decide is appropriate for a stable value fund. The rule isn'​t that you can run your securities at an average maturity of 90 days. It is that you run them at a average maturity consistent with the stable net asset value, not to exceed 90 days.... [​N]​ow you need to operate with adequate liquidity to meet your expected redemptions."

"You can'​t have less than 10% in daily liquidity assets and 30% in weekly liquidity assets. That'​s a third of the fund that is effectively maturing in a week or less, a pretty significant mandate. I don'​t see how that'​s not going to make it a lot harder to run funds and really constrain their ability to develop yield. In terms of just the fundamental impact on how a MMF performs, that 10 and 30 requirement is going to have the biggest impact," he tells us.

MFI also asked, "What else are you concerned about? Keen says, "The other [​major] change is that everyone'​s shadow NAV is going to be published monthly now with a 60 day lag.... Basically none of the changes were as bad as they might have been ... or as good as they could have been. But that'​s the nature of regulation." He adds, "​The 60-​day lag gives you a lot of time, if you know that there is going to be a public announcement of something that might make investors concerned, to deal with it. I don'​t see how they responsibly could have gone any shorter."

Keen also notes, "None of the revisions [​to 2a-​7] have ever been good for fund boards. All that ever happens to fund boards is that they have more and more things they have to do. They have to deal with this liquidity requirement, they have to deal with stress tests, and they have to pick which NRSROs they want to rely on. Generally, those kinds of things, the board can delegate, but it still puts it in a different posture."

Finally on further changes, Keen tells MFI, "I assume we are going to get the same comments every time they ask.... I don'​t quite know how by asking for more comments, it'​s going to change things. Look at the floating price proposal, which was in the June 2009 release.... People who actually have money invested in funds, particularly individuals, uniformly said, '​Don'​t do that. I don'​t want a fluctuating product, and I don'​t want to have to put my money in a bank. I like what money market funds do. I know I have a risk of loss. I accept that.'"

Watch for the full final rules to be posted on the SEC'​s Final Rules page later this week. For a full copy of the latest Money Fund Intelligence, e-​mail info@​cranedata.​us.

The February 2010 issue of Crane Data'​s flagship Money Fund Intelligence newsletter, which goes out to subscribers this morning, features the stories: "SEC Passes New Money Market Fund Reforms," which discusses the recently-​passed Amendments to Rule 2a-​7; "Navigating New Rules: Q&​A w/​Stephen Keen," an interview with the veteran money fund attorney and Partner of Reed Smith LLP; and "Will Rising Rates Bring Outflows to Inst MMFs?," a look at how institutional assets have fared in past periods of Fed funds rate hikes. We excerpt several quotes below. Note that we'​re expecting the SEC'​s Final Money Market Reform rules to be posted next week, or even later today, so stay tuned!

Our lead story says, "​Last week, the U.​S. Securities & Exchange Commission approved the outline of the first changes to money market mutual fund regulations since 1997, tightening Rule 2a-​7'​s quality, maturity and liquidity standards, and adding a new liquidity mandate. The Commission'​s summary release, entitled, "SEC Approves Money Market Fund Reforms to Better Protect Investors," says, "​The Securities and Exchange Commission today adopted new rules designed to significantly strengthen the regulatory requirements governing money market funds and better protect investors."

Stephen Keen says on money fund regulations in MFI, "The rule is almost always -- you have to do what you decide is appropriate for a stable value fund. The rule isn'​t that can run your securities at an adequate maturity of 90 days. It is that you run them at a adequate maturity consistent with the stable net asset value, not to exceed 90 days.... Now you need to operate with adequate liquidity to meet your expected redemptions."

Finally, our study of asset flows during periods of falling, flat and rising rates says, "​We decided to look back at the last 5, 10 and 20 years to see just how much institutional assets appear to be impacted by rate moves. The answer appears to be that rate cuts have helped money funds tremendously, but flat rates, and rate hikes, have merely slowed or stalled asset increases."

Money Fund Intelligence features news, info, and performance on over 1,​300 money market mutual funds. Statistics include: assets, WAM, expense ratio, 7-​day yield, 30-​day yield, 1-​month return, 3-​mo, YTD, 1-​year, 3-​yr, 5-​yr, 10-​yr, and since inception returns, and gross yields. MFI also contains tables of the top-​yielding and largest money funds and our benchmark `​Crane Money Fund Indexes. To request a sample of the latest issue, e-​mail info@​cranedata.​us.

The December issue of Crane Data'​s flagship Money Fund Intelligence newsletter predicts that 2009'​s sharp money fund asset outflows will moderate and come to an end in 2010, and MFI also discusses recent regulatory issues with JPMorgan Asset Management'​s Robert Deutsch. The 30-​page monthly PDF features the articles, "MF Assets Down $​500B, But Are Declines Ending?," "Defending the $​1 NAV: JPMorgan'​s Bob Deutsch," and "BlackRock, BGI Merger Shrinks MF Mgr Universe." It also features news, fund performance, and more, and shows the Crane Money Fund Indexes continuing to hit record low yield levels.

MFI writes, "Money fund assets are currently at $​3.​319 trillion according the Investment Company Institute'​s weekly totals. They have declined by 13.​3% year-​to-​date, likely making 2009 funds' second worst year in history after 1983'​s 18.​4% decline. But the latest weekly and monthly statistics appear to show the outflows slowing."

Deutsch discusses client concerns, regulatory issues, ultra-​low yields, and more in our monthly Q&​A. He tells Crane, "​This financial crisis has challenged every investor and manager of money funds. It was the most challenging environment we had ever seen, and there are still the unresolved regulatory issues to be addressed. In addition, the challenges for our clients continue."

In November, our Crane Indexes continued drifting lower or remained flat. The Crane 100 saw its 7-​day and 30-​day yields (​as of Nov. 30) fall to 0.​07% and 0.​08%, respectively, while the broader Crane Money Fund Average fell to 0.​04% on both its 7-​day and 30-​day yields. The Crane Institutional MF Index dipped to 0.​06% (​7-​day annualized) and 0.​07% (​30-​day), while the Crane Retail MF Index remained at a rock-​bottom 0.​02%. The Crane Tax Exempt MF Index remained at 0.​05% for its 7-​day and 30-​day yield average.

Assets tracked by Crane declined by $​49 billion in November, a slower rate of decrease than October'​s $​65 billion or September'​s sharp $​115 billion. To request the full issue of Money Fund Intelligence or our Crane Index benchmarking excerpt, e-​mail Pete Crane. Or look for more excerpts from our articles in coming weeks.