The Securities and Exchange Commission's new rules for money funds feature a two-year implementation period, but there's already speculation about how corporate treasuries will invest their short-term cash if they decide they're no longer comfortable with money funds.

“We definitely believe there will be material reallocation away from prime institutional money funds,” said Fred Berretta, head of the Global Liquidity Investment Solutions team at Bank of America Merrill Lynch.

The Securities and Exchange Commission voted in July to require institutional prime money funds—those that invest in riskier assets—to switch from a stable, $1-per-share net asset value to a floating net asset value (NAV), raising the possibility that a company could get back less money from a fund than it put in. The new rules also allow fund companies to impose fees on redemptions from funds or block redemptions in times of financial stress.

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Susan Kelly

Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.