J.P. Morgan Asset Management has partnered with Calastone, a global funds network, to introduce new levels of automation to money market funds via its “Morgan Money” trading platform.

With assets under management of US$1.9 trillion, J.P. Morgan Asset Management will initially use Calastone to enhance its entire settlements process, bringing automated settlements to its platform. Morgan Money will be the first in the market to offer automated settlements to its users via Calastone’s technology.

Calastone digitises the investment and reporting process for money market portals, fund providers and investors. The service enables high levels of automation, comprising of trade placement, settlement, reporting and cash balance sweeps.

The announcement strengthens the relationship between the two the firms. Where today Calastone enables trade automation for JP Morgan funds globally, this new partnership enables Morgan Money to leverage new features, including automated settlements, which enhance the service available to its users.

The two firms say that the current pandemic has heightened the need to adopt greater levels of automation among fund providers and their investors. Calastone’s solution provides a fully digitalised market ecosystem which promises firms greater immediacy, accuracy and certainty of execution through automated workflows. 

“Now more than ever, it is essential for fund providers to stay competitive, attractive and meet the future needs of investors," said Dan Kramer, Calastone’s vice chair, Americas.

“Traditional models remain under immense pressure and have very quickly been seen to come up short," added Ed Lopez, Calastone’s chief revenue officer. "The key to managing this new post-COVID world, and to staying attractive in it, sits in embracing new, smart technologies – and making the switch from manual to automated. To see JP Morgan share in our vision and champion innovation is fantastic – and it gives us even greater confidence of the real potential for how far our Money Markets Services can go long term.”

Pandemic not a repeat of global financial crisis, but...

On CTMfile we have reported recently on other positive news related to the money markets. MTS, part of the London Stock Exchange Group, launched an electronic multilateral exchange system for European unsecured money market trading denominated in euros, while elsewhere ICD Portal reported that corporate assets in MMFs grew 38% year-on-year on its portal in 2019.

Last week, however, there was a fairly significant fly in the ointment, as on 19 May Bloomberg reported that Northern Trust is to shutter one of its money market funds. The US$1.7bn Northern Institutional Prime Obligations Portfolio will stop accepting new investments next month and start selling its holdings under a liquidation plan set for July 10, according to a filing that Bloomberg saw. Bloomberg's own data suggests that the fund lost approximately US$2bn in assets in March when the pandemic truly hit worldwide, and had yet to recover these funds.

Looking at overall money market fund data, the very informative Crane Data website shows that money market fund yields once again inched lower in the latest week with the Crane 100 down 3 basis points (through Friday 22 May) to 0. 16%. The Crane 100 MF Index fell below the 1. 0% level in mid-March and below the 0. 5% level in late March, and is down from 1. 46% at the start of the year and down from 2. 23% at the beginning of 2019. The Crane Data site makes the point that, while a number of money funds have already hit the zero floor, most continue to show some yield. According to Money Fund Intelligence Daily, as of Friday, 393 funds (out of 852 total) yielded 0. 00% or 0. 01% with assets of US$1.316 trillion, or 25.7% of the total.