A new focus on money market funds : HSBC Global Assets Management

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                     In the era of the subprime crisis, every financial institution has believed and considered cash as a risk-free asset and the safest one to hold their more liquid assets. After the collapse of AIG and the Lehman Brothers, the industrialists and the financial institutions realized that the cash is also having the liquidity risk due to the unexpectable crisis and turmoils, The attitude of the investors are also changed towards the cash as the liquid asset.

                   At the time of the 2008 financial crisis, many banks could not make repayments due to the illiquidity and mase the defaults. Here all the asset managers realized that they need a robust strategy, and which needs to be effective in various types of market situations. They have the objective to provide the liquidity and generating of yields on the investments.

                    At HSBC, the funds, liquidity management is developed to attain the liquidity and meet the investor's need accordingly. They have made the objective of “To provide the security of their investments and generate the returns on or equal to the market returns.”  To maintain the liquidity the company has two constraints such as internal and external constraints such as regulatory bodies and the internal committees. Through the regulatory policies, the investor gained confidence and they have believed that they could get the market returns accordingly.

                     In the case of internal constraints, the changes are very frequent and more complex than the external environment. All the internal constraints need to be changed accordingly to build up the investor's confidence. The internal constraints include the supplement changes rapidly according to the market changes to maintain the liquidity accordingly,

                       HSBC has also faced some other constraints such as minimum ladders and maximum shareholders concentrations, guidelines to manage credit risk, to diversify the portfolio, in response to the market movements. The requirements of money availability have been changed periodically. Money has been invested according to market changes.

                        Transparency is an important thing to be placed in every asset management. Every investor is being aware of the knowledge of the government regulations, if the funds are allotted according to the regulations and disclosing to the public will boost the public.

                  The best way of maintaining, the liquidity is through transparency to the customers and maintain the liquidity, portfolio diversification based on internal and external constraints. Every company should be in alignment with the regulatory body as well as the internal committee, the funds need to be maintained in according to the market condition.

               To conclude the HSBC, should change accordingly to the market condition and not be over depended on the only in one country.

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