Best at Euro and non-Dollar Commercial Paper
More and more dealers are coming back into the euro-commercial paper market which several of them quit almost a decade ago due to thin margins and low volumes. CSFB, Merrill Lynch and Morgan Stanley have returned to non-dollar CP to compete with firms like Citibank, Barclays Capital, Deutsche Bank, JP Morgan, NatWest, Goldman Sachs, UBS Warburg, and Lehman Brothers which stuck at it through the 1990s. The attraction is in potentially fast-growing volumes now that the single currency has removed many of the artificial barriers between national commercial paper markets and the international market that operated out of London. It is increasingly a market with a global following. The big dealers sell ECP around the world: to the Japanese investment trust manager, the middle eastern bank, the Latin American central bank. Japanese money market funds are increasingly large investors in ECP.
In Europe, which now accounts for two thirds of total investment in ECP, corporations and institutional investors are seeking to make their cash holdings produce higher returns.
The arrival of large rated money market funds, which maintain enough cash to meet expected short-term redemptions while at the same time boosting the average life of their investments by holding three and six month maturity CP, have helped.