The approach of the October implementation date for new rules governing institutional prime money market funds is shaping up as a dividing line for corporate treasuries and other institutional investors, with many observers predicting a mass exodus from prime funds in the months before the rules take effect.

"There is an expectation that sometime this summer—the end of the second quarter, certainly going into the third quarter—a significant amount of the money that is in institutional prime funds will move over into government money market funds," said Roger Merritt, managing director at Fitch Ratings.

"Treasurers are either undecided about how they feel about the new features of institutional prime funds or they're just sort of nervous about getting through this period of transition," Merritt said. "I think many of them will choose the safest route and move the money into government money market funds."

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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.