According to Bloomberg JPMorgan Chase and BlackRock closed
European money market funds to new investments after the European Central Bank
lowered deposit rates to zero. JPMorgan,
the world’s biggest provider of money-market funds, won’t accept new cash in
five euro-denominated money- market and liquidity funds because the rate cut
may result in losses for investors, the company said in a notice to
shareholders. BlackRock, the world’s largest asset manager, is closing two
European funds. Both firms are based in New York.
The deposit rate cut “will almost certainly move cash bids
in short-dated instruments into negative territory, and so we have taken the
step to restrict subscriptions and switches into the funds in order to protect
existing shareholders from yield dilution,” JPMorgan said on its website.
The ECB yesterday reduced its benchmark rate to a record low
of 0.75 percent and took its deposit rate to zero. Money funds have been
struggling to invest client assets at a profit as interest rates globally are
near record lows and Europe’s sovereign debt crisis has reduced the supply of
available debt. Managers have been forced to cut fees to keep customer returns
above zero, and some have abandoned the business.
Both firms said the restrictions are temporary and they will
monitor market conditions.
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