Category: Compliance, Money Market Reform

Money Market Reform: What’s Next?


The go-live-date for money market reform has come and gone. It was a seemingly non-event. Yet for the industry, October 14 marked the culmination of more than two years of extraordinary effort and collaboration. ICI President and CEO Paul Schott Stevens aptly described the industry’s approach to money market reform as, “substantial effort, planning, and execution within the industry…”

At Boston Financial and DST, we logged over 150,000 hours from a development and implementation perspective. Countless hours were also spent consulting with clients, participating in industry working groups, and collaborating with clients during money market town halls, webcasts, and forums.

The industry should feel good about successfully meeting the myriad of challenges presented by the money market reform, starting with product line-up decisions and culminating with the transition of prime institutional funds to a floating NAV.

But just because the industry has successfully met the go-live-date doesn’t mean daily monitoring, planning, and preparation have stopped.Photo working process. Account manager work new global project in

The Landscape Today

Across the industry, retail fund policies and daily procedures are in place and being monitored, with minor adjustments being made as needed. Asset managers are performing final reviews of prospectus language for accuracy and clarity. Intermediaries and investors are settling into new strike schedule routines.

Clarity around expectations and detailed planning resulted in successful Columbus Day and Veteran’s Day bank holiday events. But there are still some ‘firsts’ to be managed, including market holidays, unexpected market closes, and unplanned fund or market events.

What to Focus on Now

Speaking of unplanned fund events, money market funds are now required to support fees and gates. The purpose of a fee is to mitigate the cost of high transaction volume to shareholders who remain in the funds during a volatile market/fund event. Gates block all redemptions from a fund. Fees and gates can apply to both Institutional and Retail money market funds.

A fund may never need to implement a fee or gate; however, both fees and gates present numerous communication and operational considerations. With the go-live-date successfully behind us, now is a great opportunity for funds to review their fee/gate implementation strategy. picture1

Fee/Gate Strategy

There are a number of factors that a fund needs to consider when evaluating their strategy. One of the biggest priorities is communication. Coordinated and effective communication is essential, and it starts with the fund’s transfer agent and intermediaries. They’re only the beginning though.

Funds should identify all the external parties they will need to communicate to and document the communication workflow for each party.

Questions You Should Be Asking  

To help with your planning, we’ve identified some high-level questions that funds should consider when developing and reviewing their plan.

When implementing a fee or a gate, what information will need to be provided to your transfer agent?

Here’s a guideline of some of the information a transfer agent may require:

Fund(s) Impacted:

  • The name(s) and number(s) of the fund(s) impacted

If a Fee is Being Imposed:

  • The fee rate
  • The effective start date and start time
  • The expiration date and time (if known)

If a Gate is Being Imposed:

  • Whether the fund will allow broker/dealers to bypass the gate
  • The effective start date and start time
  • The expiration date and time (if known)

Is the communication protocol the same for both normal business hours and non-business hours?

If the process is different, it is important to identify and document the workflow process for each scenario. Notifying your transfer agent of a potential fee/gate as early as possible is vital. It will help ensure that the appropriate resources have not only been allocated but are also ready to be deployed.

How long will it take your transfer agent to implement a fee/gate upon notification?

Funds should have a general understanding of how long it will take their transfer agent to implement a fee/ gate request. If a fund has any unique, client-specific tasks, they will want to make sure these tasks are accounted for in the projected time frame.

Additionally, an industry-wide event may impact the “standard” time frame that has been communicated by the transfer agent. A fund should know in advance if the time frame will change if an industry-wide event were to occur so they can plan accordingly.

Is a “Dry Run” Needed?

A dry run allows funds to put their plans into action. It provides funds with valuable perspective on how thorough their plan is, the opportunity to refine it, and ultimately increases confidence in the plan.

A dry run should involve individuals from all key business areas within the fund. As a fund’s board is part of the fee/gate implementation protocol, the fund should think about involving the board in the dry run. Funds may also want to consider including their strategic, external partners as well.

Our questions are not a definitive list of everything that a fund must consider, but should provide a guideline to the breadth of possible impact.

Keith Madden, Boston Financial’s lead spokesperson and subject matter expert on money market reform, also contributed to this post. Some background on Keith:


Keith Madden, Relationship Manager, Boston Financial


Keith, a relationship manager for Boston Financial, has more than two decades of experience in financial services, with expertise in retail, institutional, and 529 products. Keith joined Boston Financial in 1998 as a client service officer managing a multi-client operations team. During his tenure at Boston Financial, Keith has always played an integral role in Boston Financial’s relationship management program and continues to have an impact. Today, he manages one of Boston Financial’s key client relationships. Keith earned a Bachelor of Science in Business Administration from the University of Massachusetts, Lowell.


Fran Corcoran

Fran Corcoran

Fran is focused on helping clients drive growth, mitigate risk, and improve business performance by leveraging Boston Financial's deep industry knowledge, resources, and solutions. As a relationship manager for Boston Financial, Fran has more than 25 years of strategy, consulting, and client engagement in the financial services sector. Fran's client relationship experience spans mutual funds, 529 Plan, and Alternative Funds relationships. Fran joined Boston Financial as a fund liaison, later participating in development of the 529 Plan servicing team and becoming a key contributor to Boston Financial's relationship management program. Fran holds a bachelor's degree from Syracuse University. In addition to her active role within the relationship management community at Boston Financial, Fran is an ambassador for the Wellness Program at Boston Financial.


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