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NEW YORK Oct 14 U.S. prime money market funds
may see further outflows in the coming weeks after the final
phase of regulatory reform for the $2.6 trillion industry is
implemented, Fitch Ratings senior director of funds and asset
management Greg Fayvilevich said on Friday.
Money fund operators have switched many of their prime funds
for institutional investors into ones that own only government
securities in an effort to be exempt from new rules from the
Securities and Exchange Commission that went into effect on
Meanwhile, corporate treasurers and other cash investors
have pulled money from prime funds, which they had used as an
alternative to bank accounts, because they dislike the
imposition of floating share price and redemption limits and
fees during periods of market turbulence.
Since last October, prime fund assets have fallen by more
than $1 trillion, resulting in reduced demand for short-term
debt issued by banks and other corporations and higher borrowing
costs for them.
Roughly $300 billion of the asset outflows from prime money
funds will not return due to conversion of some funds into
government-only funds, said Fayvilevich.
"You are looking at a new era for money funds," he said.
"Not all the money will come back."
(Reporting by Richard Leong; Editing by Chizu Nomiyama and