Treasury Action: the new money market reforms go into effect Friday
Treasury Action: the new money market reforms go into effect Friday, and the lead up to the deadline has seen massive shifts in funds. Cash continued to surge into government only funds in a massive exodus from prime money funds, according to Investment Company Institute (ICI) data that showed inflows of $87.8 B into the former in the first week of October, to a record high of $2.05 tln. Prime funds saw a $55 B drop in assets in September, and are down over $980 B over the year to $473 B. The new government regulations will discontinue the stable $1 per share fixed price for institutional funds and employ a floating net asset value (NAV) calculation instead. Government only funds, which will be exempt from this change, have seen assets surge to 77% of all money-market assets, from a prior maximum of 40%, according to ICI. Meanwhile, LIBOR rates have been on the rise as the supply of funds has dried up, with the 3-month testing 0.8775% from Friday's 0.87606%. The rate was at 0.620% in early June.