​ Prime Money Funds Offer Higher Returns, Less Risk Than Treasury, Bank. A recent study by John Bilson, professor of finance at the Illinois Institute of Technology, supports the push to "​allow broker/​dealers to use AAA rated money funds" as "​qualified securities" under Rule 15c3-​3, an initiative spearheaded by Federated Investors and Treasury Strategies. The paper, "Eligible Securities for Customer Segregated Accounts" finds treasury funds generally riskier than prime money funds (​the analysis uses statistical returns provided by Crane Data LLC). Bilson also argues for a zero percent "​haircut" under Rule 15c3-​3. Treasury money funds: offer lower rates of return not due to lower risk but "because of the regulatory demand"; offer more risk due to less "​room for diversification" and longer average maturities; and, "may face higher operational risks" than prime funds, Bilson says. Copies of the study were provided to government officials and opinion makers.

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