(Bloomberg) -- Facing a shrinking pool of dealers in a key part of the $2.6 trillion money-fund industry, Deborah Cunningham did something last month she's never done before in her 34 years at Federated Investors. She arranged one of these collateral trades directly with an new partner - an insurance company.

Cunningham, chief investment officer for global money markets at Pittsburgh-based Federated, is seeking alternatives to traditional counterparties for repurchase agreements, or repos, as new regulations drive banks from the business. With that market contracting, money funds are finding new ways to get the securities they need, opening a door for other institutions to step into roles once dominated by banks.

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