SEC's New Money Market Fund Rules: What Your Business Needs to Know

If your business uses money market funds to manage cash, it's crucial to understand the recent changes by the Securities and Exchange Commission (SEC). These new rules, which went into effect in 2023, aim to enhance the resilience and transparency of money market funds, but they could also impact how businesses manage their investments.

Critical Changes to Money Market Fund Rules

Increased Liquid Asset Requirements:
The SEC now requires money market funds to hold at least 25% of their daily liquid assets and 50% in weekly liquid assets. This change is designed to help funds manage rapid investor redemptions during market stress.

Removal of Temporary Redemption Gates:
Funds can no longer impose temporary redemption gates, which previously restricted investors from redeeming shares. This aims to reduce the risk of investor runs during stressed market conditions.

Mandatory Liquidity Fees:
Institutional prime and tax-exempt money market funds must impose liquidity fees on redeemed shares when daily net redemptions exceed 5% of a fund's net assets unless costs are minimal. This change is intended to allocate redemption costs more fairly.

Potential Impacts on Your Business

Lower Yields:
With increased liquidity requirements, funds may lower yields to cover costs, potentially reducing returns for your business.

Higher Fees:
Introducing mandatory liquidity fees could lead to higher costs, further impacting returns.

Reduced Liquidity:
Accessing cash quickly might become more challenging due to liquidity fees, which could affect your ability to meet financial obligations promptly.

Better Alternatives for Business Cash Management

Rather than accepting these new limitations, Holdings offers a superior solution for managing your business cash:

High-Yield Interest Structure:
Earn 2% APY on balances

Daily interest calculation ensures your business maximizes returns every single day, providing advantages typically reserved for large corporations.

Fee-Free Banking:
Unlike money market funds with their new fee structures, Holdings offers:

• No monthly fees

• Unlimited free ACH and wire transactions

• Free invoicing and bill pay capabilities built directly into the platform

Integrated Financial Platform:
With Holdings, your business can:

• Invoice, bank, pay bills, and manage accounting—all in one place

• Access automated reporting tied directly to banking activity

• Utilize embedded bookkeeping services for a fully hands-off accounting experience

Strategies for Businesses

Switch to an Integrated Financial Platform:
Consider Holdings' complete financial operating system that combines high-yield banking, free money movement tools, and integrated accounting solutions.

Maximize Your Earnings:
With our tiered interest structure, you'll earn more on your deposits than with traditional money market funds that are now facing increased regulatory constraints.

Simplify Your Operations:
Consolidate your financial tools into one platform to save time through automation and streamlined workflows.

If you have any questions about these new regulations or want to learn more about how Holdings can provide a superior alternative to money market funds, please comment below. We're here to help you navigate these changes with confidence and give your SMB the same financial advantages as the largest corporations.

These SEC rules were adopted on July 12, 2023.