Corporate treasuries continue to stow the majority of their short-term cash in bank deposits, according to a recent survey, and put the largest chunk of the remaining money into money-market funds, a traditional short-term investment option. But those patterns could change in the next year or so as U.S. interest rates rise and new regulations make banks and money funds less hospitable places for corporate funds.

“As I talk to treasurers, it’s a very much wait-and-see approach,” said Tom Hunt, director of treasury services at the Association for Financial Professionals (AFP). “The decisions will get made when all the options are presented to them.”

AFP’s 2015 Liquidity Survey shows companies are keeping 56% of their cash in bank deposits, which include CDs and time deposits as well as demand deposit accounts. That’s up from 52% in 2014, and is the highest portion of corporate cash kept at banks in the 10 years AFP has been conducting the survey. The first survey, in 2006, showed just 23% of short-term funds held in bank deposits.

Fifteen percent of corporate cash is sitting in money-market funds, according to the 936 corporate practitioners surveyed by the AFP. That’s off just slightly from 16% in 2014 and 2103, but down from 19% in 2012 and 30% in 2011.

The outlook for companies’ use of money market funds is clouded by new Securities and Exchange Commission regulations requiring prime funds—those that invest in corporate securities—to switch to a floating net asset value (NAV) instead of the stable $1-a-share money funds use now. Government money funds are not required to switch to a floating NAV. The rules, which also allow money funds to impose fees and gates in times of market stress, take effect in October 2016.

Hunt suggested that as more money funds announce the date when they’ll switch prime funds to a floating NAV, more corporate treasuries may make changes.

Lee Epstein, CEO at Decision Analytics, a San Francisco company that advises treasurers on short-term investments, predicted that investors would wait until the last minute to make a move. “If there is any migration, you’ll start seeing it next summer, or even after the October 2016 implementation of floating NAV,” he said.

According to the AFP survey, more than a third (37%) of respondents don’t plan any significant changes in the way they invest in prime funds, while just under a third (29%) expect to avoid using prime funds and 17% will move money out of prime funds.

Lance Pan, director of research at Capital Advisors Group, expects $600 billion to exit prime funds. Given the possibility that those flows or the rule changes lead to disruption or systems glitches, Pan said, institutional investors should plan for the switch to floating NAV and talk to their fund sponsors sooner rather than later.

“We don’t know exactly how other shareholders will behave through October 2016,” Pan said. “You need to have a strategy to manage through this implementation period.”

Others doubt there will be any large-scale migration out of money funds.

“I think investors have a high degree of confidence in money-market funds,” said Paul LaRock, a principal at consultancy Treasury Strategies. “I don’t see any movement away from money-market funds.”

Companies’ decisions about where to park short-term cash are all about interest rate differentials, LaRock said. “The reason money is staying in bank accounts is the earnings credit rate that banks give is attractive relative to alternative investments.” (Phoenix-Hecht’s most recent bank pricing survey showed the most frequently observed ECR was 20 basis points, unchanged from 2012, the last time it asked the question.)

“When interest rates return to historical norms, I think [investors] will largely do what they’ve done in the past,” LaRock said. “Corporates and large nonprofits for their short-term cash will seek the combination of safety, liquidity, and yield they’ve sought in the past and that is still presented to them by money market funds.”

He also predicted that sweep accounts, which take funds in a bank account at the end of the day and invest them in money funds, will see renewed interest as rates rise, after falling into disfavor in the low-interest-rate environment, which made the monthly maintenance fee on sweep accounts prohibitive.

Switching from stable to floating NAVs not only raises the possibility that investors won’t get all their money back, it means accounting issues for treasuries. The SEC and the Internal Revenue Service have provided some relief, but using prime funds with floating NAVs will still require some accounting work.

Companies can avoid funds with floating NAVs by switching from prime to government funds. But while there’s little difference between the yields of prime and government funds in the current low-interest-rate environment, the differential will increase as rates rise, which could make treasuries more reluctant to abandon prime funds.

There are also concerns that government funds could have a hard time getting all the securities that they need if large numbers of investors try to move to government funds from prime funds.

Basel III and Bank Deposits

Another variable is the way that banks respond to Basel III’s liquidity coverage ratio, which puts a premium on deposits they can rely on for more than 30 days. Given the liquidity coverage ratio, banks will be more interested in companies’ operating deposits and less interested in non-operating deposits. Some banks have already responded by rolling out products that require companies to commit to leaving funds on deposit for at least 31 days.

While the AFP survey showed a bigger portion of corporate cash being held in bank deposits, there was a sharp drop in the use in non-interest-bearing deposit accounts. Just 40% of respondents said they use such accounts, down from 51% in 2014.

Tom Hunt, AFPHunt, pictured at left, suggested the decline in the use of non-interest-bearing accounts might reflect banks’ response to Basel III’s liquidity coverage ratio.

The survey shows companies’ current use of alternative short-term investments other than money funds and Treasury bills is limited. Treasury bills, the biggest investment after money funds, hold just 5% of short-term funds, while 4% is in commercial paper and 3% each in Eurodollar deposits and separately managed accounts (SMAs). None of the other options registers over 2%.

Separately managed accounts did score high when respondents were asked about the options they are considering in light of the coming changes in money fund regulations. While just 3% of corporate cash is currently held in SMAs, 52% of respondents said they are considering using them.

AFP’s Hunt said that overall, the survey results underscore the emphasis companies now put on their banking relationships.

Not only are 56% of short-term funds held at banks, but 56% of respondents said their selection of money market funds is driven by whether the fund sponsor is one of their banking relationships, he noted. “Have a strong banking relationship is certainly something that’s becoming much more important.”