Funding & Investing

Money market fund technology in a rising rate environment

Published: Sep 2022

Tricia Turner from Cachematrix by BlackRock discusses the impact of a rising interest rate environment on money market funds and how cash management technology is adapting to meet treasurers’ needs – from technology integration to agile development.

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Portrait of Tricia Turner, Director, Head of International Relationship Management for Cachematrix by BlackRock

Tricia Turner

Director, Head of International Relationship Management for Cachematrix

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The last year has been nothing if not challenging for corporate treasurers. The Russia-Ukraine conflict, surging inflation and sluggish growth are all contributing to an environment that is fraught with difficulties at every turn.

For money market funds, meanwhile, the current landscape is one that continues to be characterised by change. “While the recent flurry of central bank interest rate rises may be good news for investments and money market fund rates today, the path of interest rates remains highly uncertain. This means the need for prudent duration and liquidity management is crucial, now more than ever,” notes Tricia Turner, Director, Head of International Relationship Management for Cachematrix by BlackRock.

Likewise, with euro money market funds re-entering positive territory for the first time in seven years, treasurers need to find new ways to manage their balances. “For corporates in Europe managing euros, I imagine a significant amount of their time will be spent reviewing their portfolios, repositioning and perhaps looking at different investment options now on the table,” says Turner. “We’ve seen a big surge in French and German corporates, for example, who haven’t invested in money market funds for years but are now coming back to the table and want to talk to fund managers about their investment options.”

Cash management technology for an evolving market

Where cash management technology is concerned, having a system that is efficient and easy to use is more important than ever in the current environment. “Treasurers need to be able to perform their daily tasks easily – they don’t want to be toggling from one page to another page, or from one system to another, with drop down boxes and different information on different screens,” says Turner. “The system really should be a joy to use, and not a frustration.”

Security is, of course, an unavoidable topic where technology is concerned. Turner points out that cyberattacks have significantly increased since the pandemic – and as such, corporates need to make sure they work with vendors who have the right security processes in place, and who take precautions such as dual approval on trading systems and two-factor authentication.

In addition, Turner cites the growing focus treasurers are placing on effective technology integration. “Treasurers need real-time and holistic information on their cash balances and risks,” she points out. “They are often using many different systems, which need to be able to speak to one another – and it all needs to be done in a cost-effective manner.”

While the current market may be challenging, the technology that companies can use to manage money market funds is also becoming more sophisticated. “We work at Cachematrix, and across the industry, to bring new technologies such as application programming interfaces (APIs) and more advanced cloud-based technology to clients to improve their cash management processes,” says Turner. “Companies are also looking at ways to optimise their systems and partnerships to provide corporates with treasury management solutions, all under one umbrella.” At the same time, there is a continuing focus for corporates on incorporating technologies such as artificial intelligence and, as the digital assets industry matures, corporates are asking for help facilitating their exposure and trading of cryptoassets.

Of course, while some treasury teams are very tech-savvy, and are already taking advantage of these technologies, this is not universal – and other treasury teams are still working to move away from spreadsheets.

Benefits of Cachematrix

While it is owned by BlackRock, Cachematrix is an independent, fund-agnostic portal – “and we really do take that very seriously, maintaining strict information barriers between the two businesses,” says Turner. She adds that this arrangement gives clients the benefit of a large firm’s resources, together with the advantages of an independent tech company – “which is quite unique.”

Cachematrix by BlackRock leverages Cachematrix’s Software-as-a-Service (SaaS) platform, which is built on BlackRock Aladdin technology. Over 1,000 developers are working on the Cachematrix system and the ongoing development of the portal – an approach that Turner says differentiates Cachematrix amongst other money market fund portals. “We have a huge amount of experience, being one of the world’s largest and oldest money market fund platforms out there,” she adds. “Our portal’s ethos is all about end-to-end operational efficiency and system integration.”

As well as ease of use – Turner says that money market funds can be traded and settled in just five clicks – Cachematrix enables treasurers to conduct risk analytics and access bespoke report packages that can be delivered via email or Secure File Transfer Protocol (SFTP). “We also have a number of security controls, such as compliance rules and dual approvals,” she adds.”

Also important is the overall client experience and relationship. “We have an extensive relationship management team, offering global client support,” says Turner. “In addition, our global client service centre is available around the clock for clients.”

Technology for a challenging environment

So how can Cachematrix support treasurers in the current market? Turner says that a lot of companies are reviewing their cash strategies in light of rising interest rates, which in some cases means looking at increasing their use of money market fund investments, or indeed looking at using money market funds for the first time.

“Corporate treasurers really don’t want the added burden of logging into multiple systems,” notes Turner. “So a system such as Cachematrix by BlackRock, which can consolidate their trading and risk, is absolutely key.” She points out that compliance rules on the portal can be implemented against treasurers’ investment policies to ensure that investment guidelines are always followed.

Where integration is concerned, Turner says corporate clients are increasingly asking about how they can integrate the platform with a treasury management system (TMS). “We have a partnership with Kyriba as well as other TMS integrations across the board,” she says. “That’s really important for our clients: they go into one area to do their trading, and their balances are updated not just on that system, but at their TMS. Everything is in sync, so they don’t have to do any double keying, enter additional trades or send it to their settlements team or back office.”

Turning to the need for streamlined administration, Turner says Cachematrix has recently developed a new admin module which provides self-service functionality. As such, clients can access information such as details of their user lists and recent user activity on a self-service basis, providing additional convenience.

Future developments

Focusing on the future, Turner says the platform is well-positioned to adapt to changing market conditions and customer needs. “One of the key purposes of my team is to understand our clients in so much detail – we need to know what they like, what they don’t like, what they’re using, what they don’t use, so that we can make sure we are developing the right things,” says Turner, who manages the sales and relationship team. “We generate ideas based on client need, and our developers work on them.”

In the past, platforms may have only been able to roll out updates every few months. But today, the use of agile software principles means that Cachematrix is able to develop and release updates within a couple of weeks. As such, updates are rolled out on a very frequent basis.

Ongoing additions and enhancements will continue to be rolled out to the platform to ensure the technology always stays current, and that it continues to meet treasurers’ needs in the complex and fast-moving environment that is financial technology. From innovative developments to continuous platform enhancements, Cachematrix is committed to streamlining the cash management experience.

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