Gearing up for distribution to shareholders and paying down debt, MNCs keep cash in MMFs.
Although US dollar institutional assets in money-market funds have leveled off and decreased somewhat after rising over the past 12 or so months, the erosion of assets under management has slowed. This suggests larger companies are parking cash for use in the future, according to JP Morgan Chase.
“Relative to the average over 2013-2017 period cumulative net outflows from USD MMF are running about $50bn less, suggesting more money is staying in MMF, either because yields are higher or because corporates are using the MMF as a half-way house between the fixed income market and future payments to shareholders,” JPM said in a recent note to clients. This could all change by the end of the year, with outflows from prime MMFs picking up as companies get a better handle on the tax implications of bringing home the cash. Read more here.
Also this week, Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo is looking to make his agency more deliberative. Gone are the days when the CFTC operated in calamity mode, popping out regulations like donut holes. In releasing his so called “Reg Reform 2.0 Agenda” at the International Swaps and Derivatives Association (ISDA) annual meeting, Chairman Giancarlo said now was the time for a more thoughtful process to devising and implementing new swap rules.
“I'm committed to a deliberative process and getting back to regular order at the agency,” Mr. Giancarlo said in an interview at the meeting with former CFTC Commissioner and current ISDA Chairman Scott O’Malia. “We're not in the wake of a crisis right now – we need to take the time to get this right.” Read more here.
Finally this week, iTreasurer looks at how the relationship between companies and activists has entered détente. Whereas in the old days activists would make outlandish (and often self-serving) demands of companies and their boards, it’s now become more about collaboration.
This was one takeaway from a recent meeting of NeuGroup’s Assistant Treasurers’ Group of Thirty (AT30). One banker at the meeting who leads his firm’s activist defense team said companies and activists are working together more than ever. Activists have modulated their campaigns, offering advice that companies can more easily agree to. Also, many companies have activist playbooks at the ready or are now just managing their cash better. Companies are also getting help from banks, which now have activist-defense advisories to guide companies in dealing with outspoken shareholders. All of this has mellowed the exchange between company and activist. Read more here.
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.