has put its money market funds on the Depository Trust & Clearing Corporation Platform
. The switch over will create operational efficiency for the exchange clients who now use individual Treasury bills as collateral for their trades, said James F. Getz
, president, retail sales division, Federated Securities.
The Pittsburgh-based fund firm is the largest provider of money market funds to third parties. It hopes that investment banks and clients will now Federated money market funds as collateral when dealing with exchanges. It claims that firms using funds as collateral will still receive a competitive yield but only have to monitor a single CUSIP.
The Securities and Exchange Commission
recently approved the Options Clearing Corporation's
(OCC) request for a rule change to allow money market funds as an eligible form of margin collateral, opening the door for firms such as Federated.
"Federated money market funds via the DTCC are a great answer for automating the process surrounding the pledging of collateral which, in the case of direct Treasuries, is time consuming, expensive and, on a comparative basis, less efficient," Getz said. "We're providing this product and record-keeping solution so that short-term balances may be invested in a more cost-effective way."
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