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

“We definitely believe there will be material reallocation awayfrom prime institutional money funds,” said Fred Berretta, head ofthe Global Liquidity Investment Solutions team at Bank of AmericaMerrill Lynch.

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

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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.