One part of the market that definitely will switch out of prime funds unless fund companies can develop an alternative product is sweep accounts
, which automatically move funds out of a bank account into some sort of short-term investment, Carfang said.
Together with a team of skilled experts, he or she can offer solutions like sweep accounts
to leverage cash flow, equipment purchase lines that convert to term loans and even interest rate swaps, which help mitigate interest rate risk on long-term loans.
Further, The Derivative Project requested that in addition to the SEC mandating that Retirement Fund providers replace money market mutual fund options with FDIC insured sweep accounts
, a request was made to allow retirement savers at 401k's and 403B's (and SEP and Individual Retirement Accounts) the option to invest directly in FDIC bank CDs in the maturity of their choice or in U.
that automatically transfer net balances at day's end--netting debits and credits on aggregate across all of the accounts as opposed to doing so on an individual account basis--allow for full segregation of the accounts.
The key objection centered on the potential curtailing of useful market-making activities such as commercial and municipal debt underwriting, holding inventory in order to make secondary markets, sweep accounts
, commercial paper issuance, and foreign exchange services.
For the most part, banks were still offering business interest checking accounts to larger businesses through sweep accounts
, which use money market accounts for deposits each night and are then moved back the following business day.
New products and cash management techniques--savings accounts on which you could write a few checks each month, sweep accounts
that enabled corporations to manage their cash more efficiently, the widespread use of credit cards, even exotic things like ATMs and debit cards--were becoming common.
More specifically, the Board clarified that when disclosing transaction account balances in sweep accounts
, financial institutions are not required to exclude funds that may be transferred to another account.
The transaction includes USD430m in loans, USD495m in deposits and sweep accounts
, and up to USD400m in trust and brokerage account relationships.
are designed to invest the excess money from an account once all payments have been made, enhancing a company's earnings potential.
minimize non-interest bearing assets.
A final chapter covers other collection resources, such as bankruptcy processing and sweep accounts