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Money Market Reform Creates Arbitrage for Short-Term Investors

  • Bond managers can earn extra half percentage point interest
  • Eurodollar futures trim risk in commercial paper trade

Money market reform has a silver lining for some investors.

Bond managers can earn more than half a percentage point of extra interest annualized by buying securities that money market funds are shunning now and by using derivatives to trim the risk, said Dan Dektar, chief investment officer at Amundi Smith Breeden LLC in Durham, North Carolina.