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Stability Investment Solutions Diligence

Money Market Fund Reform

Dennis Gepp

Managing Director & Chief Investment Officer- Cash

John arker

Director

Federated Investors !"#$ %%

CIPFA Scotland Public Finance Conference, 6-7 March 2014

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he hree Ru'es of (ork))

Out of clutter, find simplicity;

From discord, find harmony;

In the middle of difficulty lies opportunity.

- Albert Einstein

*

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Overvie+

The European Commission has published a comprehensive

Money Market Fund reform proposal

Enhances MMF portfolio liquidity, transparency, credit quality(which we agree with

Makes MMF sponsors choose between placing !" in capital

reserve or moving to #ariable $et %sset #alue (#$%# in&ecember ')*

,

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genda !or. +hat +e +ou'd 'ike you to go a+ay +ith today$

+utting things into contet--

. /hy are regulators seeking to make changes0

. Main European Commission proposals

. +otential timings

. /hat could this mean for MMF users0

. /hat might this mean in terms of risk0

. /hat is Federated 1nvestors2 view0

. /hat is Federated 1nvestors doing about it0

. /hat should investors consider doing about it0

/

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(hy are the Regu'ators seeking to make changes0

The Credit Crisis of '3 underlined the need for greater regulation of the

Financial 1ndustry

European Money Market Funds are an integral part of the financial system

Minimise potential for Fund 4runs5

6elief that Constant $et %sset #alue (C$%# funds are at greater risk of a 4run5-despite

evidence to the contrary

6elief that C$%# funds are seen to be 4guaranteed5

To ensure MMFs remain resilient even in times of etreme market stress and disruption

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Main 2uropean Commission roposa's !as at March *34/$

Creation of two categories of MMFs

5short7term MMFs5 (may be C$%# (until ')8 or #$%#

4standard MMFs5 (must be #$%#

C$%# MMFs to have capital buffer of !"999

for : years from &ecember ')*

thereafter mandatory conversion to #$%#

(Fuller list of proposals in %ppendi

5

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otentia' iming

;nlikely to be decided in this European parliament(new Elections in May ')*

7 in the unlikely event of these proposals being accepted in

this parliament thencom

John arker

Director

3*3 6547 *536

?parker=federatedinv>com

48

F e d e r a t e d I n v e s t o r s ! " # $ % %

f ede ra ted i nves to r s . co .uk

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Important Information

This material is directed to Eligible Counterparties and Professional Clients in the UK. This document is produced for informational purposes only and is not to be regarded as an offer or invitation to buy or sell an

investment in Federated Cash Management Funds nor does it solicit any such offer or invitation.

Applications to invest in Federated Cash Management Funds must only be made on the basis of the offer documentation relating to the investment including the Prospectus and relevant Key !nvestor !nformation

"ocument# and is only available to Eligible Counterparties and Professional Clients.

Persons resident in territories other than the UK should consult their professional advisers as to $hether they re%uire any governmental or other consent or need to observe any formalities to enable them to

invest.

!t is the responsibility of investors to satisfy themselves that any investment in Federated Cash Management Funds is suitable for them.

!f you are in doubt as to the suitability of an investment in Federated Cash Management Funds you should see& independent financial advice.

The value of investments and income from the Federated Cash Management Funds may fall as $ell as rise and investors may not get bac& the amount originally invested.

Past performance is not a guide to future performance and yields may vary.

Ta' assumptions are sub(ect to statutory change and the value of ta' reliefs $ill depend on individual circumstances.

This presentation is issued in the UK by Federated !nvestors UK# ))P.

This document is only directed at the intended recipients and for the purposes of United Kingdom legislation this document may not be copied or distributed to any person in contravention of *ection +, of the

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