Edstrom has amassed more than 20 years of expertise in bank products, FDIC insured sweep accounts
, and cash management strategies through his various successes at well-respected financial firms.
Schwab Bank's deposits grew a relatively modest 3.8% in 2017 to $169.7 billion, as the company deliberately limited bulk transfers out of money market sweep accounts
in order to remain below the $250 billion consolidated asset threshold that would impact its bank regulatory requirements.
"Except for sweep accounts
, in the absence of any change in regulation, we don't expect the vast majority of this money to remain in money market funds," he said.
As firms analyze how the final regulation applies to them and develop compliance strategies, they should keep in mind how they and their advisers use sweep accounts
. Almost certainly, changes are necessary to meet the requirements of available exemptions.
This hurts the net interest margins they earn on money market funds and cash sweep accounts
, making these operations less profitable than anticipated.
If the custodian gives you favorable pricing in return for your use of their proprietary mutual funds, ETFs or cash sweep accounts
(where they make substantially more in the relationship with you), are you giving your clients access to the whole of the market as a proper fiduciary advisor?
do require precisely a dollar in and a dollar out," he 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.
"It's not as simple as running sweep accounts
across a few saving accounts and rolling it up at the end of the night," he said.
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.