Further, it provides drive-through banking facilities, automatic teller machines, night depository, personalized checks, credit and debit cards, Internet and mobile banking, treasury management services, remote deposit services, electronic funds transfers through ACH services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts
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
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?
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.
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.
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.