After treading water for much of January and February 2025, money market mutual fund assets have recently surged higher, hitting a record $7.297 trillion on Tuesday, just a few billion away from the $7.3 billion barrier. For February month-to-date through 2/25, total money fund assets have increased by $70.6 billion to $7.297 trillion, according to Crane Data's Money Fund Intelligence Daily series. Our MFI XLS monthly shows money fund assets rising $51.1 billion in January 2025 to a record $7.234 trillion as of 1/31/25, while the SEC's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets rose by $47.9 billion in January 2025 to a record $7.286 trillion.
In other news, Reuters recently published an article titled, "SEC extends key deadlines for US Treasury clearing rule," which explains, "Wall Street's top regulator hit the brakes on a key reform on Tuesday, delaying by a year the rollout of new rules designed to curb systemic risk in the $28.5 trillion U.S. Treasury market by channeling more trades through clearing houses. The U.S. Securities and Exchange Commission said in a statement late on Tuesday it had extended by 12 months compliance dates for the clearing of eligible cash transactions and repo transactions."
It continues, "The rules, which require some cash Treasury and repurchase or 'repo' agreements to be centrally cleared, were originally supposed to be implemented in phases by June 2026, but several Wall Street trade associations last month asked the SEC to extend the process by at least one year for the cash and repo clearing deadlines. 'The U.S. Treasury market is a critical piece of the global financial system. New rules must be implemented properly, and any operational issues must be addressed,' said SEC Acting Chairman Mark Uyeda. 'This one-year extension provides additional time to implement and validate operational changes,' he said in a statement."
They write, "Uyeda is leading the SEC alongside fellow Republican Hester Peirce and Democrat Caroline Crenshaw. They all voted in favor of the postponement. U.S. President Donald Trump's nominee to lead the agency Paul Atkins has yet to be confirmed. The Securities Industry and Financial Markets Association (SIFMA) said on Tuesday the delayed implementation was important to avoid market disruptions."
Reuters quotes SIFMA, "Market participants have become increasingly concerned that the original implementation dates were overly aggressive and would add unnecessary risk to the nation's and world's most important asset market." They add, "Reuters reported last year that bond market participants were considering a request for a timeline extension, as key details on how mandatory central clearing would work had not been yet defined and many feared the remaining two years might not be sufficient to transition."
The piece also says, "The rules originally said clearing houses would have until March 2025 to comply with provisions on risk management, protection of customer assets and access to clearance and settlement services. Their members had until December 2025 to begin central clearing of cash market Treasury transactions and until June 30, 2026, for repo transactions. The repo market is where banks and funds exchange short-term loans backed by Treasuries. The SEC kept the March 2025 deadline for clearing agencies to implement required access and risk management changes as prescribed by the SEC clearing rules, but it extended to September 30 this year the deadline for clearing houses to enforce those requirements for clearing members."
The SEC's release, "SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities," says, "The Securities and Exchange Commission today extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act by one year to Dec. 31, 2026, for eligible cash market transactions, and June 30, 2027, for eligible repo market transactions. Under the rule, a covered clearing agency that provides central counterparty services for U.S. Treasury securities must establish, implement, maintain, and enforce written policies and procedures reasonably designed to require that every direct participant of the covered clearing agency submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty. The rule also requires a covered clearing agency to identify and monitor its direct participants' submissions of transactions for clearing, including how the covered clearing agency would address a failure to submit transactions."
The SEC says, "The extension will provide additional time for further engagement on compliance, operational, and interpretive questions, and facilitate an orderly implementation of the rules. The temporary exemption allows covered clearing agencies not to enforce policies and procedures established pursuant to Rule 17ad-22(e)(6)(i) against any market participants currently clearing indirect participant activity that are not ready to comply with such policies and procedures, but it does not affect the ability of a covered clearing agency to implement such policies and procedures for those that are prepared to comply. If a direct participant of a U.S. Treasury covered clearing agency determines to offer certain access models or segregated margin accounts, the covered clearing agency would be obligated to enforce those rules regarding such models or accounts against the relevant participant, and the direct participant must comply with those rules."
Finally, see Federated Hermes' "Demand for liquidity remains high in Europe." It says, "Investors are still drawn to liquidity products in the UK and EU despite the rate cuts." Cunningham comments, "I think the demand will remain high, but ultimately there are divergences."
