This week’s International Treasurer editorial meeting produced several story ideas staff will be looking into over the course of the next couple of weeks. The first is an examination of the Congressional Budget Office’s (CBO) recent report on tax options for US corporations. We’ll also take a look at some of the effects of the Basel Committee’s liquidity coverage ratio decision. Also on tap is a look at Goldman Sachs’s decision to post money market fund values on a daily basis. Finally, a look at trading portals in light of JPMorgan’s announcement of improvements to its portal.
CBO Tax Report. One of the main media takeaways from the CBO’s report was that eliminating corporate tax deferrals could generate billions of dollars in revenue – music to the current administration’s ears. “On balance, however, eliminating deferral would boost both efficiency and tax revenues. In fact, eliminating deferral entirely would boost U.S. tax revenues by more than $100 billion over a 10-year period, according to an estimate by the staff of the Joint Committee on Taxation (JCT); that would be the largest revenue increase attributable to any of the options discussed in this report [emphasis ours],” the report said.
Corporations already were likely losing hope that meaningful – and much discussed in 2012 – tax reform will happen in 2013. Some of the takeaways of the report, along with recent news that current Obama Chief of Staff Jack Lew would replace outgoing Treasury Secretary Timothy Geithner – a move seen as political and not policy or corporate tax friendly – confirm their worst fears.
Basel LCR Decision. Amid seemingly widespread disappointment, the Group of Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, agreed on January 6, 2013, to amendments to the Liquidity Coverage Ratio (LCR), which is part of Basel III. Press coverage has either characterized their softening of the LCR minimum requirements as caving to the bank lobby, the US bank lobby in particular, or a necessary acknowledgement of reality to ensure that banks will continue to lend in a weak recovery as central bank liquidity and support ultimately drains from the system.
For the purposes of NeuGroup discussions and International Treasurer, the implications for bank relationships, credit availability and pricing, etc. are more interesting. We’ll check in with NeuGroup members, including members of the Bank Treasurers’ Peer Group, to see what they make of the decision.
Goldman MMF Move. Goldman Sachs Asset Management Wednesday announced that it will start disclosing a daily market value Net Asset Value (NAV) for its US-based CP Money Market funds. The firm added that it would start disclosing NAV for the Government and Municipal funds next week.
Goldman is likely trying to get ahead of coming rules on a floating NAV, which many feel, despite the rule being stalled at the Securities and Exchange Commission, is inevitable. “As the industry and regulators work to determine the next course of action relative to money market fund reform, GSAM believes increased transparency will help investors, and the market at large,” the firm said in a statement. “This disclosure is also consistent with Goldman Sachs’ long-standing advocacy of mark-to-market accounting.”
James McNamara, Managing Director and President of Goldman Sachs Mutual Funds, said in a statement that the decision “will have no impact to how fund shareholders transact or the way the funds are managed,” adding that it will “also benefit the ongoing dialogue around potential regulatory changes to money market funds.”
If you replaced “benefit” with “influence,” you might be closer to the nut of Goldman’s plan. International Treasurer will check in with other fund managers to see if they will follow suit.
Portals. JPMorgan recently announced the launch of “multi-asset trading platform designed for a post-regulatory trading environment.” JPM said this will be a “new multi-asset class trading platform, bringing pre-trade, trade and post-trade functionality onto a single platform for the first time. Debuting with a first wave of trading solutions, it is a complete redesign and consolidation of the firm’s existing e-trading offerings from front to back, and will present a seamless client experience throughout the entire trade lifecycle.”
We’ll take a look at the new portal and, as a follow-up to our August piece on Citi’s OpenCollateral, how the two compare. We’ll also see what other offerings are out there.