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Home » Viewpoints Proposal to Implement Volcker Rule Raises Significant Issues for Regulated Funds GloballyBy Dan WatersFebruary 14, 2012 Congress enacted the provision of the Dodd-Frank Reform Act known as the Volcker Rule to restrict banks from sponsoring and investing in hedge funds (so-called covered funds) and using their own resources to trade for purposes unrelated to serving clients—something known as “proprietary trading.” It seems clear that Congress did not craft the Volcker Rule to target publicly offered, substantively regulated funds like U.S. mutual funds and non-U.S. retail funds. However, the way in which regulators have proposed to implement the Volcker Rule raises significant issues for non-U.S. retail funds. In response to this proposal, ICI Global has submitted a detailed comment letter. The two examples from the ICI Global comment letter below demonstrate the impact of the rule on non-U.S. retail funds, from the perspective of funds as funds and as investors participating in the global capital markets. Fund perspective The proposal expands the category of funds captured by the Volcker Rule, deeming countless investment funds around the world to be “covered funds,” including non-U.S. retail funds. This would inappropriately and unduly impede the organization, sponsorship, and normal activities of non-U.S. retail funds. This is contrary to Congress’s intent to focus on hedge funds and private equity funds, not registered funds, and to limit the extraterritorial reach of the statute.
Market participant perspective Because the proposal’s foreign trading exemption significantly differs from the Securities and Exchange Commission's (SEC’s) long-standing and globally understood rules for delineating between U.S. and offshore securities transactions—known as Regulation S—the proposal would disrupt the global securities markets, including trading with a “resident of the United States.” The proposal raises genuine concerns, as it will impact portfolio management of non-U.S. retail funds and the availability of liquid securities, and increase trading costs. We are concerned that a possible result is smaller and/or fragmented markets with less liquidity for many securities that are important to global investors.
Those are just two examples of our deep concerns with the Volcker Rule’s impact on non-U.S. funds. Please see the full letter for a detailed description of the issues identified. Dan Waters is Managing Director of ICI Global.
TOPICS: Fund RegulationInternational Proposal to Implement the Volcker Rule Raises Deep Concerns for U.S. Registered FundsBy Paul Schott StevensFebruary 14, 2012 Congress enacted the provision of the Dodd-Frank Act known as the Volcker Rule to restrict banks from using their own resources to trade for purposes unrelated to serving clients—something known as “proprietary trading.” TOPICS: Fund Regulation A Bad Diagnosis Could Be Fatal for Money Market FundsBy Paul Schott StevensFebruary 13, 2012 Bad diagnosis leads to bad prescriptions—and the errors can be fatal. The Wall Street Journal’s lead editorial today, “Money Fund Make-Over,” falls into that trap. The Rx of this editorial is premised on the notion that money market fund investors don’t understand that they’re just that—investors. Yet every fund’s prospectus provides a clear description of all risks and rewards associated with the fund. No fund offers any expectation of an explicit or implicit guarantee by the fund sponsor or the U.S. government. That message is repeated in virtually every communication from money market funds to investors. Amended CFTC Rule 4.5 Appears to Impose Unnecessary Burdens on Many Mutual Fund AdvisersBy: Rachel McTagueFebruary 10, 2012 On February 8, the Commodity Futures Trading Commission (CFTC) issued amended Rule 4.5, a regulation governing commodity pool operators (CPOs), as well as a related rule proposal. Among other changes, the amendments to the rule significantly narrow the ability of registered investment advisers to rely on the rule’s exclusion from regulation as a CPO. As a result, many advisers will be required to register with the CFTC even though they are already regulated by the Securities and Exchange Commission (SEC). TOPICS: Fund Regulation Achieving the Proper Balance on FATCABy Keith LawsonFebruary 08, 2012 ICI and ICI Global have engaged actively with Treasury and the Internal Revenue Service (IRS) as they have crafted the proposed Foreign Account Tax Compliance Act (FATCA) regulations, which were issued today. Our message has been simple: ensure that the tax compliance benefits anticipated by FATCA, which we support strongly, justify the costs that will be imposed. TOPICS: Taxes The SEC’s Money Market Fund Plans—Scoring a Hat Trick Against Investors and the EconomyBy Paul Schott StevensFebruary 07, 2012 The Wall Street Journal reports today that the Securities and Exchange Commission (SEC) continues to pursue regulatory changes for money market funds that will harm investors, damage financing for businesses and state and local governments, and jeopardize a still-fragile economic recovery. Quite a regulatory hat trick. An Important Step in the Process of Enhancing 401(k) Fee DisclosureBy Ianthé ZabelFebruary 03, 2012 On February 2, the Department of Labor (DOL) issued final regulations concerning 401(k) disclosures. The rule requires companies that administer defined contribution plans to disclose administrative and investment costs to employers who sponsor the plans. TOPICS: Retirement Policy Fund Investment in Commodities Provides Opportunity and Diversification for InvestorsBy Karen Lau Gibian and Rachel H. GrahamJanuary 26, 2012 On Capitol Hill, a hearing at the Permanent Subcommittee on Investigations (PSI) raises questions about mutual fund investors’ ability to get commodity exposure in their portfolios and suggests the Internal Revenue Service (IRS) should no longer allow this type of investment. TOPICS: Fund RegulationTaxesFinancial Markets Featured Chart: Americans Say Retirement Saving Incentives Should Be a National PriorityBy Sarah A. HoldenJanuary 26, 2012 Stresses on the U.S. government budget have resulted in a reexamination of national priorities with respect to taxes and government spending. Against that backdrop, our survey of 3,000 U.S. households for our recent research report—America’s Commitment to Retirement Security: Investor Attitudes and Action—contained a new question. Households were asked: “Do you agree that continuing to provide incentives to encourage retirement saving should be a national priority?” TOPICS: Retirement Research ETF Basics: The Creation and Redemption Process and Why It MattersBy Mara Shreck and Shelly AntoniewiczJanuary 19, 2012 One benefit of exchange-traded funds (ETFs) is that they give investors access to a range of strategies and indexes, with the flexibility of transacting throughout the trading day at prices that typically approximate the value of the fund’s underlying portfolio. To see how ETFs accomplish this, one must understand how ETF shares are created and redeemed. TOPICS: Exchange-Traded Funds ICI Registers Deep Concerns with the Volcker Rule ProposalBy Rachel H. GrahamJanuary 18, 2012 The “Volcker Rule” provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act was written to restrict banks from using their own resources to trade for purposes unrelated to serving clients. While the Volcker Rule was not directed at U.S. mutual funds and other registered investment companies, its proposed implementation raises deep concerns for the U.S. registered fund industry. TOPICS: Fund RegulationFinancial Markets Volcker Rule Implementation Threatens Global Investment Funds and Their ShareholdersBy Dan WatersJanuary 18, 2012 The proposed implementation of the so-called Volcker Rule has serious implications for global investment funds and their shareholders. Like our U.S.-based ICI colleagues, ICI Global has today voiced concerns about this rule in a statement to the U.S. House subcommittees examining how the rule will impact markets and investors. TOPICS: Fund RegulationFinancial Markets Data Update: Money Market Funds and the Eurozone Debt CrisisBy Emily Gallagher and Chris PlantierJanuary 13, 2012 In October and December, we discussed how portfolio managers of U.S. prime money market funds have addressed the ongoing debt crisis in the eurozone. Here is a look at the latest monthly data on these funds’ holdings by home country of issuer. Holdings of French issuers continued to fall in December, and almost 80 percent of these French holdings are either short-dated collateralized repurchase agreements or other instruments that mature in seven days or less. TOPICS: Financial MarketsMoney Market Funds PCAOB Must Demonstrate Need for Mandatory Audit Firm RotationBy Amy Lancellotta and Gregory SmithDecember 22, 2011 The Independent Directors Council (IDC) and the Investment Company Institute (ICI) oppose requiring a mandatory rotation of audit firms as detailed in a concept release from the Public Company Accounting Oversight Board (PCAOB). TOPICS: Fund RegulationOperations and Technology ICI Adds to Educational Resources on Exchange-Traded FundsBy Mike McNameeDecember 16, 2011 ICI Adds to Educational Resources on Exchange-Traded Funds. TOPICS: Exchange-Traded Funds Money Market Funds Continued to Reduce Eurozone Holdings in NovemberBy Sean Collins and Chris PlantierDecember 16, 2011 Over the last year, U.S. money market funds have significantly reduced their holdings of debt securities issued by banks and other businesses headquartered in the 17 countries that use the euro as their currency. That trend continued in November. TOPICS: Financial MarketsMoney Market Funds Time to Stamp Out the Confusion Around ‘Shadow Banking’By Brian ReidDecember 06, 2011 In the United States, money market funds are governed by tight risk-limiting rules, rules that have become considerably tighter since 2008. The Securities and Exchange Commission (SEC) has indicated further changes are forthcoming. Yet some recent commentary and reporting on money market funds misses this fact, substituting instead the vague notion that these funds lurk in a seemingly unregulated world of “shadow banking,” an epithet used to debase a large group of nonbank financial intermediaries and activities. A recent Wall Street Journal column, for example, characterized money market funds as “one of the riskiest participants in shadow banking.” Last May, a Reuters story described shadow banking as “a network of loosely regulated private equity, hedge, and money funds that together are large enough to topple the global financial system.” TOPICS: Fund RegulationFinancial MarketsMoney Market Funds Funds' Board Structures Promote Efficiencies and Cost Savings for ShareholdersBy Amy LancellottaDecember 05, 2011 Reporters, academics, and others who are unfamiliar with investment companies sometimes question the unusual structure of fund boards. Unlike operating companies—where each company as a rule is overseen by its own board—multiple funds in a complex typically share common boards. In Overview of Fund Governance Practices, 1994-2010, we found that 83 percent of fund complexes use a “unitary board” (one board for all their funds), while 17 percent use “cluster boards” (two or more boards, each overseeing a group of funds within the complex). TOPICS: Fund Governance Data Update: Money Market Funds and the Eurozone Debt CrisisBy Sean Collins and Chris PlantierDecember 02, 2011 In October, we discussed how portfolio managers of U.S. prime money market funds have addressed the ongoing debt crisis in the eurozone. Here is a look at the latest monthly data on these funds’ holdings by home country of issuer. We will revisit the topic in mid-December with updated analysis once November figures become available. TOPICS: Financial MarketsMoney Market Funds Now Is the Time to Put America on a Path of Fiscal ResponsibilityBy Paul Schott StevensNovember 21, 2011 On behalf of funds and the 90 million investors that they serve, fund industry leaders are sending a simple but urgent message to Congress and the White House: the time has arrived to put America’s fiscal house in order. Thirty executives of companies represented on ICI’s Board of Governors, the chair of the Independent Directors Council, and I are joining together to send a letter to the co-chairs of the Joint Select Committee on Deficit Reduction—known as the “Super Committee”—every other member of Congress, and the President. TOPICS: Financial MarketsTaxes Deloitte/ICI Study Shows Retirement Plan Fees Driven Primarily by Plan Size, Asset AllocationBy Sarah HoldenNovember 16, 2011 According to a comprehensive new study, primary factors driving fees in 401(k) and other defined contribution retirement plans are the number of plan participants and average participant account balance, as well as the allocation of plan assets to equity investment options. A Thoughtful Approach to Regulating Derivatives and Protecting InvestorsRobert C. GrohowskiNovember 08, 2011 A Thoughtful Approach to Regulating Derivatives and Protecting Investors TOPICS: Fund Regulation Washington Post Columnist Ignores Regulation, Transparency of FundsBy Paul Schott StevensNovember 07, 2011 Today I submitted the following letter to the editor of the Washington Post: Mutual funds are among the most regulated and transparent investment vehicles available, with investor protection as a defining principle. In his Sunday column, Steven Pearlstein chose to ignore that record. TOPICS: Fund RegulationFinancial Markets ICI Responds to Hearing on Excessive SpeculationBy Stephanie Ortbals-TibbsNovember 03, 2011 ICI issued the following statement in response to today’s hearing, “Excessive Speculation and Compliance with the Dodd-Frank Act,” before the Senate’s Permanent Subcommittee on Investigations. TOPICS: Fund RegulationFinancial MarketsExchange-Traded Funds The Volcker Illusion: Why Bank Regulation Won't Work for Money Market FundsBy Paul Schott StevensOctober 24, 2011 The Volcker Illusion: Why Bank Regulation Won't Work for Money Market Funds TOPICS: Fund RegulationMoney Market Funds ICI Responds to Hearing on Exchange-Traded FundsBy Stephanie Ortbals-TibbsOctober 19, 2011 ICI issued the following statement in response to today’s hearing in the Senate Banking Subcommittee on Securities, Insurance, and Investment, “Market Microstructure: Examination of Exchange-Traded Funds.” TOPICS: Fund RegulationFinancial MarketsExchange-Traded Funds The Facts Missing From a Wall Street Journal Column on Money Market FundsBy Mike McNameeOctober 18, 2011 Misinformation lurks in a recent column from Wall Street Journal Money & Investing editor Francesco Guerrera, “Hidden Dangers Lurking in Money Market Funds.” Given the vital role that money market funds play in our economy, regulators and investors alike need the best information possible on this topic. So let’s correct the record with a few key facts. Money Market Funds’ Prudent Response to European ChallengesBy Sean Collins and Chris PlantierOctober 14, 2011 The ongoing debt crisis in the eurozone poses challenges for portfolio managers of U.S. prime money market funds, as those managers actively continue to adjust their holdings to meet new developments. The latest monthly data on money market funds’ holdings demonstrate that these funds are carefully managing their risks in Europe, and have been gradually reducing eurozone holdings for some time now. TOPICS: Financial MarketsMoney Market Funds Investors and Their Long-Term Commitment to SavingBy Paul Schott StevensOctober 14, 2011 This week, I had the pleasure of addressing members of the Rotary Club of Seattle on “The Outlook for Investors and Investing.” My speech approached this subject in part by examining our present situation in the historical context of past market bubbles and downturns. TOPICS: Financial Markets Global Markets: ICI Urges Measured Policy Approaches to ReformsBy Ari BursteinOctober 12, 2011 Across the globe, regulators remain active in examining possible rule changes and other initiatives to bolster the integrity of financial markets. As these efforts proceed, ICI has urged balanced policy responses that can strengthen markets while preserving and enhancing efficiency that benefits funds and their shareholders. TOPICS: Financial Markets A New Voice for Global Investment FundsBy Paul Schott StevensOctober 10, 2011 Over the past two decades, the world has witnessed the rise of asset managers as global financial intermediaries. The fund industry has been at the forefront of this movement, vigorously expanding its international reach and offering investors opportunities to diversify and to access new markets. TOPICS: International Mutual Fund Investors Remain Steady Despite Volatile MarketBy Brian Reid and Chris PlantierSeptember 30, 2011 Each month, ICI reports definitive long-term mutual fund flows, made up of stock, bond, and hybrid funds. The Institute also provides an estimate of weekly flows for those funds. It’s important to consider both weekly and monthly data when interpreting the activity of fund investors. Despite sizable August outflows, more-recent weekly data suggest that investors remain cautious but steady. TOPICS: Financial Markets A Win for Both Fund Advisers and the SECBy Tami SalmonSeptember 28, 2011 In October 2010, ICI began to work with staff at the Securities and Exchange Commission (SEC) to obtain no-action relief from a recordkeeping requirement of the “pay-to-play” rule, which the SEC adopted in July 2010. SEC staff recently granted that no-action relief, a positive development both for advisers to mutual funds and the SEC’s staff. TOPICS: Fund Regulation Commentary: Court Strikes Down SEC’s Proxy Access RuleBy Dorothy A. BerrySeptember 14, 2011 On July 22, the United States Court of Appeals for the District of Columbia Circuit vacated the proxy access rule adopted by the Securities and Exchange Commission (SEC) last year. The court found that the SEC had failed to adequately assess the economic effects of the rule and noted in particularly harsh terms the SEC’s failure to adequately address the rule’s impact on investment companies. The case was brought by the Business Roundtable and the U.S. Chamber of Commerce, and IDC filed an amicus brief jointly with ICI in support of their petition to vacate the rule as applied to investment companies. We’re pleased with the result but disappointed that it took a litigated action to get here. TOPICS: Fund Regulation Déjà vu—U.S. Money Market Funds and the Eurozone Debt CrisisBy Chris Plantier and Sean CollinsSeptember 12, 2011 In June, we wrote about the indirect exposure that U.S. prime money market funds have to European sovereign debt, especially Greek debt, through their holdings of securities issued by European banks. At that time, we noted that these funds had no direct exposure to Greek sovereign debt, and that they were managing their indirect exposure by constantly examining the quality of their portfolio and the creditworthiness of investments. By July 1, we could report that U.S. prime money market funds had no direct exposure to Portuguese or Irish government or bank debt. TOPICS: Money Market Funds Changes to Cost Basis Rules Provide Investors More FlexibilityBy Karen Lau GibianAugust 26, 2011 In a positive development for fund shareholders, the Department of the Treasury and the Internal Revenue Service have issued new cost basis reporting rules that enhance a fund’s ability to provide shareholders with average cost basis information. Fund shareholders have become quite familiar with average cost basis information, which many funds have been providing to their shareholders voluntarily for 20 years or more. The regulatory change makes it more likely that funds will continue to use this method as their default method for redeemed shares. TOPICS: Taxes New York Times Editorial Misrepresents the Behavior of 401(k) InvestorsBy Brian ReidAugust 23, 2011 TOPICS: Retirement ResearchRetirement Policy ICI Economists Provide Long-Term Mutual Fund Flow AnalysisBy Brian Reid and Chris PlantierAugust 17, 2011 All eyes were on the markets in early August just after Standard & Poor’s Corp. downgraded the long-term sovereign credit rating on the United States of America to AA+ from AAA and as Europe’s ongoing fiscal challenges dominated the news. TOPICS: Financial Markets ‘One Size Fits All’ Doesn’t Fit Today’s Fund InvestorsBy Brian ReidAugust 16, 2011 David F. Swensen is the chief investment officer of Yale University and a noted author of investment advice for the public. In books and articles over the last decade, he’s focused much of his attention on mutual funds. Yet he consistently ignores or is unaware of basic facts about how mutual funds operate, how investors seek and use funds, and how individuals manage their portfolios—gaps on full display in his latest commentary in the New York Times last weekend. The Uphill Path to Better Economic Analysis in RulemakingBy Paul Schott StevensAugust 10, 2011 Last month, the United States Court of Appeals for the District of Columbia Circuit vacated the Securities and Exchange Commission’s rule on proxy access. The unanimous ruling marked the fifth time since 2005 that the DC Circuit has struck down an SEC rule, and the third decision based on the agency’s failure to properly weigh economic consequences and to consider—as the law requires—the effects of its rules on efficiency, competition, and capital formation. TOPICS: Fund Regulation Standard & Poor’s Downgrades U.S. Government DebtBy Mike McNameeAugust 06, 2011 On Friday, August 5, Standard & Poor’s Corp. downgraded the long-term sovereign credit rating on the United States of America to AA+ from AAA. The agency reaffirmed the U.S. government’s A-1+ short-term rating, which is the rating that money market funds rely upon in making their investment decisions. Moody’s Investor Services and Fitch Ratings Ltd. have reaffirmed their Aaa and AAA ratings for long-term U.S. government debt. TOPICS: Financial Markets The Lingering Threat of Floating NAVsBy Mike McNameeAugust 05, 2011 Despite widespread opposition from dozens of business, municipal, and investors groups, regulators continue to ponder the question of whether money market funds should be required to abandon the stable $1.00 net asset value (NAV) in favor of a floating NAV. The Debt Ceiling Debate and Its Impact on Money Market FundsBy Chris Plantier and Sean CollinsAugust 04, 2011 Data on money market funds flows continue to draw attention, especially with today’s report that net outflows totaled $66 billion in the week ending August 3. TOPICS: Money Market Funds 401(k) Plans Help Keep Americans on TrackBy Paul Schott StevensAugust 01, 2011 ICI sees strong evidence that the features of 401(k) plans help Americans avoid overreaction to financial turmoil, by countering extremes in investor behavior that hard times often produce. This was one of the key points that I made recently at the Ayco Summer InnerCircle Benefits and Compensation Conference in Saratoga Springs, New York. I invite you to look over my full presentation, which contains a trove of data and charts pertinent to retirement policy. TOPICS: Retirement Policy It’s Highly Unlikely that Money Market Funds Will ‘Break the Dollar’ in U.S. Debt CrisisBy Chris Plantier and Sean CollinsJuly 29, 2011 The continuing impasse over the U.S. government’s borrowing limit—the “debt ceiling”—and efforts to rein in the growth of federal debt has raised many questions for investors in all types of financial assets. ICI believes that money market funds are no more vulnerable to these events than other assets: As ICI Chief Economist Brian Reid wrote yesterday, “I don’t know of any scenario in which money market funds would be disproportionately affected compared to other market participants by a failure to raise the debt ceiling.” TOPICS: Money Market Funds The Comprehensive Regulatory Framework Around IRAsBy Mary S. Podesta and Elena B. ChismJuly 28, 2011 We occasionally encounter the puzzling misperception that individual retirement accounts (IRAs) are under-regulated—as in this recent Wall Street Journal story. The truth is, IRA investors benefit from a comprehensive regulatory framework, one that governs the IRA itself, IRA providers, and, in most cases, the investments that are held within the account. TOPICS: Retirement Policy What’s Happening with Recent Money Market Fund Flows?By Brian ReidJuly 28, 2011 Statistics on money market funds inflows and outflows are currently a hot topic in the financial world, so it’s a good time to dig into the data and see if we can help explain the latest trends. TOPICS: Money Market Funds ICI Recommends Fixes to Margin Proposals for Uncleared SwapsBy Heather L. TraegerJuly 22, 2011 Proposals on margin requirements for uncleared swaps could create regulatory gaps that would work against the goal of ensuring fair and orderly swap markets, ICI said in recent comment letters. We recommended changes to the proposals, which come from both banking regulators and the Commodity Futures Trading Commission (CFTC). TOPICS: Financial Markets Debt Ceiling Scenarios: ICI Addresses Key Questions Regarding Possible Impact on Money Market FundsBy Karrie McMillan and Brian ReidJuly 20, 2011 As Paul Schott Stevens wrote on ICI Viewpoints earlier, a downgrade or default of U.S. Treasury securities would have grave implications for investors, markets, and economies around the world. This prospect raises a number of questions for funds and their shareholders, particularly for money market funds. We’ve prepared a set of “frequently asked questions,” focused on money market funds, to further address the key issues and dispel some of the uncertainty produced by this unprecedented policy situation. TOPICS: Money Market Funds Let’s Preserve America’s Financial Standing in the WorldBy Paul Schott StevensJuly 18, 2011 The impasse between Congress and the Administration over increasing the U.S. Treasury’s borrowing limit and dealing with long-term budget deficits has raised many questions about the impact on American investors and investments, including mutual funds. At ICI, we share the deep concern that many feel about policy actions that could undermine the full faith and credit of the U.S. government. TOPICS: Financial MarketsMoney Market Funds Numbers Show the Success of Automatic EnrollmentBy Paul Schott StevensJuly 07, 2011 A July 7 story in the Wall Street Journal makes the assertion that a recently-enacted 401(k) law “suppresses” retirement savings. The assertion rests on faulty data interpretation. Look at the proper numbers, and the truth becomes clear—the 401(k) system, thanks in part to reforms brought about by the law, known as the Pension Protection Act of 2006, in fact promotes and increases retirement saving. TOPICS: Retirement Policy Dispelling Misinformation on Money Market FundsBy Brian ReidJuly 01, 2011 The ongoing attention to U.S. prime money market funds’ exposure to the debt crisis in Greece has brought three questions to the fore: TOPICS: Money Market Funds Before Congress, an Outpouring of Support for Money Market FundsBy Mike McNameeJune 28, 2011 Groups representing businesses and government officials from across the country recently sent a message to Congress: policymakers should preserve the fundamental features of money market funds. The occasion was last week’s hearing, “Oversight of the Mutual Fund Industry: Ensuring Market Stability and Investor Confidence,” held by the House Financial Services Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises. TOPICS: Money Market Funds In Case You Missed It: Coverage of House Financial Services Committee Hearing on FundsBy Ianthé ZabelJune 28, 2011 The future of money market funds, how to define “systemic risk” to the financial system, and fiduciary standards for retirement plans were among the topics discussed at a hearing last week before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. ICI President Paul Schott Stevens testified at the hearing, along with representatives from ICI member firms Fidelity Management & Research Company and the Vanguard Group. Wall Street Journal Editorial Gets It Wrong Again on Money Market FundsBy Mike McNameeJune 27, 2011 The Wall Street Journal posted another misleading editorial on money market funds. ICI President and CEO Paul Schott Stevens has submitted a letter to the editor in print and online to respond. Here is the text of his submission: TOPICS: Money Market Funds Money Market Funds and European Debt: Setting the Record StraightBy Sean Collins and Chris PlantierJune 20, 2011 Recent events in Greece have drawn the media’s attention to indirect exposure that U.S. money market funds may have to European sovereign debt through their holdings of securities issued by European banks. TOPICS: Money Market Funds DOL Should Allow E-Delivery as Default for Plan Communications, Says ICIBy Anna DriggsJune 17, 2011 Given dramatic changes in technology over the last decade, the Department of Labor (DOL) should allow retirement plans to make e-delivery the default method for communicating plan information, ICI said in a recent comment letter. E-delivery will enhance communication and improve the security and privacy of personal and account information. TOPICS: Retirement Policy ICI Supports Treasury Proposal to Maintain Efficiency and Transparency of Foreign Exchange Swaps and Forwards MarketBy Heather L. TraegerJune 16, 2011 Foreign exchange swaps and forwards are contracts that mutual funds and other investors use to help manage their portfolios. ICI members therefore have a strong interest in ensuring the market for foreign exchange (FX) swaps and forwards is highly competitive, efficient, transparent, and fair. TOPICS: Financial Markets Cracking Down on Tax Evaders Without Cracking Up U.S. Capital MarketsBy Keith LawsonJune 15, 2011 The Foreign Account Tax Compliance Act (FATCA) is a law designed to ensure that U.S. persons holding assets through accounts in foreign financial institutions comply with their U.S. tax obligations. In other words, the law aims to crack down on tax evasion through offshore investments. It is set to apply to payments made beginning January 1, 2013. TOPICS: TaxesInternational Switching to International Accounting Standards Wouldn’t Likely Benefit U.S. Fund Investors, ICI Tells SECBy Gregory M. SmithJune 14, 2011 A key issue for ICI’s Operations team is regulator interest in harmonizing worldwide accounting standards. As Donald Boteler, ICI’s Vice President for Operations and Continuing Education, said in ICI’s latest annual report, “It’s a noble purpose, but it’s a big, big challenge.” Take One Idea Off the Table: Forcing Money Market Funds to FloatBy Mike McNameeJune 03, 2011 The Investment Company Institute would like to thank the Wall Street Journal for its balanced approach in analyzing the debate over money market fund regulation—providing countervailing views from Yale University Professor Jonathan Macey and Columbia Law School Professor Jeffery Gordon about how to make money market funds even more resilient in the face of the next financial crisis. TOPICS: Fund Regulation Recent Data Underscores How Money Market Funds Have Responded to Regulatory ChangesBy Sean Collins and Michael BreuerMay 19, 2011 One item discussed at ICI’s 2011 Money Market Funds Summit this week was how recent reforms adopted by the Securities and Exchange Commission (SEC) have made money market funds more resilient and ready to face future periods of severe market stress. The charts below, which we discussed at the summit, illustrate the idea. TOPICS: Policy Research Data Show Americans’ Commitment to Retirement SavingBy Sarah A. HoldenMay 17, 2011 Despite the financial ups and downs of recent years, 401(k) participants have proven themselves both steady and committed to retirement saving. ICI has a window into this commitment thanks to our surveys, conducted since 2008, of a cross section of recordkeeping firms representing a broad range of defined contribution (DC) plans and covering more than 23 million employer-based DC retirement plan participant accounts as of December 2010. TOPICS: Retirement Research Money Market Funds: Four Key PointsBy Mike McNameeMay 10, 2011 Later today, the Securities and Exchange Commission will hold a roundtable on money market funds and systemic risk. ICI Chief Economist Brian Reid will be one of the panelists at the roundtable, which should be an interesting discussion. Ahead of that discussion, here are four key points worth keeping in mind. TOPICS: Fund RegulationMoney Market Funds Wall Street Journal Editorial Ignores “Economic Disruption” of Floating the Value of Money Market FundsBy Ianthe ZabelMay 09, 2011 The Wall Street Journal’s lead editorial today used a flawed analysis to mischaracterize money market funds and the recent efforts to make them more resilient in extreme market conditions. ICI President and CEO Paul Schott Stevens has submitted a letter to the editor in print and online to respond. TOPICS: Fund RegulationMoney Market Funds Experience Talks: Insight from Three Top Investment LeadersBy Inga VitolsMay 06, 2011 In a panel discussion moderated by John Rogers, Chairman and CEO of Ariel Investments, panelists Eddie Brown, President and CEO of Brown Capital Management, G. Stanley Cates, President of Longleaf Partners Funds, and Jack Laporte, Vice President of T. Rowe Price Associates, candidly discussed their own experiences and insight in money management and investing. TOPICS: Events SEC Chairman: SEC Examining Role of High Frequency TradersBy Rachel McTagueMay 06, 2011 On the first anniversary of the 2010 “flash crash,” Securities and Exchange Commission (SEC) Chairman Mary Schapiro highlighted the role of high frequency traders that day and said there is cause for the SEC to examine their role. TOPICS: Financial MarketsEvents Coping in the Expanding World of ComplianceBy Karrie McMillanMay 05, 2011 Compliance officers play a special role in the fund industry. In a nutshell, their job is to make sure the rules are followed—and thus to help maintain the industry’s fiduciary culture and the investor trust that it fosters. TOPICS: Fund RegulationEvents Geithner: FSOC Will Bring Clarity to the Designation of 'SIFIs'By Rachel McTagueMay 04, 2011 In the four years since the financial crisis started, investors have been challenged to progress toward their financial goals even as markets have twisted and turned. For the most part, even in the face of considerable fear and uncertainty, investors stayed the course. TOPICS: Events Fostering the Next Generation of InvestorsBy Edward C. BernardMay 04, 2011 In the four years since the financial crisis started, investors have been challenged to progress toward their financial goals even as markets have twisted and turned. For the most part, even in the face of considerable fear and uncertainty, investors stayed the course. TOPICS: Events The Way Forward with Fund InvestorsBy Greg JohnsonMay 04, 2011 Each year, ICI’s General Membership Meeting offers the fund industry a chance to come together to reflect on the past year and to look ahead to new opportunities. For the past eight months, it’s been my honor and pleasure to chair the GMM Planning Committee, working with a dedicated and talented group of individuals to organize this meeting. TOPICS: Events Fact Book Illustrates the Dynamic, Evolving Fund IndustryBy Brian ReidMay 03, 2011 Each year, the annual update of the Investment Company Fact Book gives ICI an opportunity to present a broad overview of the investment landscape by recording, in a single volume, insights gleaned from both our members and our own research. Sometimes the developments are slow, and the picture barely changes from one year to the next. In other years, there are large shifts that permanently affect the investment management business. TOPICS: Investor Research ICI Suggests Fixes for Proposal to Eliminate Ratings Requirement from Money Market Fund RulesBy Jane G. HeinrichsApril 27, 2011 Unintended and undesirable consequences could result from a Securities and Exchange Commission proposal to eliminate credit ratings as a required element in determining which securities are permissible investments for money market funds. In a recent comment letter, we suggested a few ways that the SEC can change its proposal to head off these unintended consequences. TOPICS: Money Market Funds Wall Street Journal Falls Short with Story on Funds’ Commodity InvestmentsBy Ianthe ZabelApril 26, 2011 Today’s Wall Street Journal included an article that attempted to analyze the debate over regulation of commodity investments through mutual funds. Unfortunately, the story omitted basic facts about mutual fund regulation and oversight, and thus fell short of providing an accurate explanation of the issue and debate. TOPICS: Fund Regulation CFTC Proposal Would Subject Funds to Duplicative, Conflicting Regulatory RequirementsBy Sarah Bessin and Rachel GrahamApril 15, 2011 Funds use swaps and other derivatives in a variety of ways to manage their investment portfolios, and many of these uses are unrelated to speculation. This is why we have been particularly concerned by a proposal from the Commodity Futures Trading Commission (CFTC) to revise Rule 4.5, which provides an exclusion for funds and certain “otherwise regulated” entities from regulation as commodity pool operators (CPOs). TOPICS: Fund RegulationFinancial Markets Let’s Set the Record Straight on 401(k)By Paul Schott StevensApril 13, 2011 As states and localities struggle to control their budgets, more and more policymakers are considering fundamental changes in the retirement plans offered to public employees. This year, at least eight states have taken up legislation to change part or all of their public retirement plans from traditional defined benefit (DB) pensions to defined contribution (DC) plans similar to the 401(k)s that that are now the most common plans in the private sector. Many more public employers are likely to consider such changes in coming years. TOPICS: Retirement Policy Revisiting the Age-Old Active Versus Passive DebateBy Brian ReidApril 12, 2011 The New York Times recently published an article examining investor behavior in the context of an old debate: actively managed funds versus passive funds (such as index funds). When reading stories like this, it is important to keep a couple of key points in mind. TOPICS: Investor Research America’s Fiscal ChallengeBy Paul Schott StevensApril 12, 2011 Friends and colleagues sometimes ask me, “What keeps you awake at night?” In recent months, it’s the nightmarish level of debt that the federal government is accruing. Put all politics aside: it is impossible to deny that Americans face an acute problem of budgetary overreach. Even before the financial crisis, our position as the world’s leading economy made us forgetful of basic principles of fiscal discipline—particularly the notion of balancing spending and revenues over the course of an economic cycle. TOPICS: Financial Markets The Challenges of Dodd-Frank ImplementationBy Paul Schott StevensMarch 31, 2011 Even though our industry was not a direct target of the Dodd-Frank Wall Street Reform and Consumer Protection Act, funds face challenges in coping with the law’s implementation. At the U.S. Chamber of Commerce’s Fifth Annual Capital Markets Summit yesterday, I had a chance to discuss several of these challenges and their implications for funds and regulators alike. TOPICS: Fund RegulationFinancial Markets For the Fund Industry, “Sunlight Through the Clouds”By Karrie McMillanMarch 29, 2011 The U.S. financial system is emerging from the global crisis. Financial markets have regained their footing. The Federal Reserve has significantly reduced its emergency facilities. The Securities and Exchange Commission has adopted its amendments to Rule 2a-7 for money market funds. TOPICS: Financial MarketsEvents Who Gets Retirement Plans and WhyBy Peter Brady and Michael BogdanMarch 25, 2011 Most workers who are likely to have the ability to save and to be focused primarily on saving for retirement have access to employer-provided retirement plans, according to research we just released. TOPICS: Retirement Research Expense Ratios in 2010: Stock Funds Down, Bond Funds FlatBy Sean Collins and Michael BreuerMarch 24, 2011 Mutual fund investors in 2010 paid lower average expense ratios in stock funds, but bond fund expense ratios remained unchanged, according to an annual research report on fund fees and expenses that we released today. TOPICS: Policy Research Closed-End Fund Assets Up 7 Percent in 2010By Daniel Schrass, Judy Steenstra, and Dorothy DonohueMarch 18, 2011 Total closed-end fund assets were $241 billion at year-end 2010, up 7 percent from year-end 2009, according to our recently released annual research report on the closed-end fund market. On net, closed-end fund assets increased by $16 billion during 2010. TOPICS: Investor Research The Facts on Mutual Funds and Securities LendingBy Michael L. Hadley, Tamara K. Salmon, and Gregory M. SmithMarch 18, 2011 Recent stories in the press have addressed the issue of securities lending, particularly in the context of 401(k) plans. For example, a March 16 story in the Wall Street Journal (“Disclosure Sought on Fund Lending”) suggests that securities lending’ in 401(k) plans “prevented some employers and investors from withdrawing their money during the financial crisis.” TOPICS: Retirement Policy Treasury Secretary Timothy F. Geithner to Provide Policy Perspective at ICI’s 2011 GMMBy Sandra J. WestMarch 09, 2011 Since 1959, ICI’s General Membership Meeting has provided fund industry executives an exceptional forum to discuss key business issues, gain a deep understanding of the policy landscape, and network with colleagues from around the country and overseas. TOPICS: Events ICI Will Scrutinize Proposal Removing Ratings Requirement from Money Market Fund RulesBy Jane G. Heinrichs and Heather L. TraegerMarch 04, 2011 On Wednesday, the Securities and Exchange Commission voted unanimously in favor of a proposal that would eliminate credit ratings as a required element in determining which securities are permissible investments for money market funds. TOPICS: Money Market Funds For the Sake of Retirement Savers, ERISA Rules Defining “Fiduciary” Need ClarityBy Paul Schott StevensMarch 03, 2011 Fiduciary status entails one of the highest obligations known to the law. Essentially, a fiduciary is one who takes it upon himself or herself to act for or advise another, thus inviting the other’s confidence and trust. TOPICS: Retirement Policy 40 Years Later, Money Market Funds Still Aren’t BanksBy Brian ReidMarch 03, 2011 Paul A. Volcker is a distinguished leader who for decades has devoted his prodigious talents to the service of our country. However, as he makes clear in his recent comment letter to the Securities and Exchange Commission, his long opposition to money market funds—dating back almost 40 years—hasn’t ended. TOPICS: Fund RegulationMoney Market Funds “Systemically Important” Designation is a Tool That Should Be Used SparinglyBy Paul Schott StevensFebruary 25, 2011 This morning, I participated in a panel discussion addressing the business community’s concerns with the Financial Stability Oversight Council’s (FSOC) proposal on the criteria to measure a company’s systemic risk. It was a lively and timely conversation; I wanted to share here some of the perspective that I brought to the panel on behalf of ICI. TOPICS: Fund RegulationFinancial MarketsMoney Market Funds Pursuing Sound Financial Regulation for International MarketsBy Ari BursteinFebruary 25, 2011 Whether at home or overseas, ICI works to ensure that regulators pursue the creation of consistent and sensible rules for the financial markets. Internationally, we recently provided input to the European Commission, which is taking a comprehensive look at ways to reform regulation of European financial markets. TOPICS: Financial MarketsInternational Wall Street Journal Story Inaccurately Portrays the Role of 401(k) PlansBy Sarah A. HoldenFebruary 24, 2011 The February 19 Wall Street Journal article, “Retiring Boomers Find 401(k) Plans Fall Short,” is based upon a narrow slice of statistics and anecdotes, painting an inaccurate portrait of the role of 401(k)s in retirement. TOPICS: Retirement Research SEC Proposal on Municipal Advisor Registration Could Create Unnecessary Regulatory BurdenBy Heather L. TraegerFebruary 24, 2011 This week, we wrote a letter to the SEC to air our concern that its proposed registration regime for “municipal advisors” is too broad and will subject many well-regulated entities and individuals, including advisers to funds, to duplicative regulatory requirements. TOPICS: Financial Markets ICI Report Provides Comprehensive Information on Fund ShareholdersBy Daniel Schrass and Michael BogdanFebruary 18, 2011 Today, we publish Profile of Mutual Fund Shareholders, 2010. The report contains a wealth of information on the 43.9 percent of U.S. households (representing 90.2 million investors) that own mutual funds. TOPICS: Investor Research Factors Behind Recent Growth in Retirement AssetsBy Sarah A. HoldenFebruary 17, 2011 Last month, we published The U.S. Retirement Market: Third Quarter 2010. The report showed that U.S. retirement assets rose nearly $1 trillion, or 6.1 percent, to $16.6 trillion in the third quarter of 2010. TOPICS: Retirement Research Check Your Savings Goals Next WeekBy Sue DuncanFebruary 16, 2011 “America Saves Week” kicks off this Sunday, February 20. ICI and the ICI Education Foundation(ICIEF) encourage Americans to use the week as an opportunity to assess their savings activity and savings goals. TOPICS: Investment Education In Case You Missed it: ICI Members Speak Out on Money Market FundsBy Mike McNameeFebruary 16, 2011 In recent weeks, two top newspapers have published commentary from ICI members who make a compelling case for preserving the fundamental strengths of money market funds. We’ve pulled out a few highlights below, but both items are worth reading in their entirety. TOPICS: Money Market Funds ICI Expresses Concerns to CFTC on Whistleblower ProgramsBy Tamara K. SalmonFebruary 09, 2011 Back in December, we commented on the Securities and Exchange Commission’s proposed new whistleblower rules, expressing ICI’s serious concerns about the unintended consequences that will likely result from the program. TOPICS: Fund Regulation ICI Urges Caution on DOL Fiduciary Duty ProposalBy Mary S. PodestaFebruary 04, 2011 When is a person a fiduciary by virtue of providing investment advice to a retirement plan or its participants? That’s the question we addressed in a letter filed yesterday with the Department of Labor (DOL), which issued a proposal last October to revise its interpretation of the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA). TOPICS: Retirement Policy New ICI Research Shows Americans’ Commitment to Retirement SecurityBy Sarah A. HoldenJanuary 27, 2011 Following the start of the financial crisis, we began closely monitoring the behavior of investors in defined contribution retirement (DC) plans, as well as the views of U.S. households of those plans. TOPICS: Retirement Research New ICI Research Examines Money Market Funds’ PricingBy Rochelle L. Antoniewicz and Sean S. CollinsJanuary 25, 2011 Today, we released new research, Pricing of U.S Money Market Funds. This paper starts by explaining how U.S. money market funds seek to maintain a stable $1.00 per share net asset value (NAV). The NAV is the price at which investors purchase or redeem shares. |
Learn More TOPICS Events ARCHIVE SOCIAL MEDIA BLOG SCAN ICI's Blog Scan: February 16, 2012-February 22, 2012 |
