News Archives: October, 2026
Crane Data's October Money Fund Portfolio Holdings, with data as of Sept. 30, 2026, show that holdings of Treasuries plunged while Repo increased. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) decreased by $140.1 billion to $8.203 trillion in September, after increasing $131.9 billion in August, decreasing $8.7 billion in July and $4.9 billion in June, increasing $255.9 billion in May, decreasing $105.9 billion in April and $103.0 billion in March. Taxable assets increased $113.2 billion in February, but they decreased $54.6 billion in January. Treasuries, the largest portfolio composition segment, decreased by $211.1 billion. Repo, the second largest segment, increased $36.0 billion in September. Agencies were the third largest segment, and CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs. Below, we review our Money Fund Portfolio Holdings statistics. (Visit our Content center to download, or contact us to request our latest Portfolio Holdings reports.)
Among taxable money funds, Treasury securities decreased $211.1 billion (-5.7%) to $3.477 trillion, or 42.4% of holdings, after increasing $260.3 billion in August and $150.2 billion in July. Repurchase Agreements (repo) increased by $36.0 billion (1.3%) to $2.853 trillion, or 34.8% of holdings, in September, after decreasing $95.4 billion in August and $148.0 billion in July. Government Agency Debt was up $20.1 billion, or 1.7%, to $1.187 trillion, or 14.5% of holdings. Agencies decreased $40.5 billion in August but increased $5.9 billion in July and $13.8 billion in June. Repo, Treasuries and Agency holdings now total $7.517 trillion, representing 91.6% of all taxable holdings.
Money fund holdings of CP and Other (mainly Time Deposits) rose, while CDs fell in September. Commercial Paper (CP) increased $0.1 billion (0.0%) to $319.8 billion, or 3.9% of holdings. CP holdings increased $19.7 billion in August but decreased $3.6 billion in July. Certificates of Deposit (CDs) decreased $1.8 billion (-0.9%) to $204.4 billion, or 2.5% of taxable assets. CDs increased $0.4 billion in August but decreased $3.8 billion in July. Other holdings, primarily Time Deposits, increased $16.3 billion (12.7%) to $144.4 billion, or 1.8% of holdings, after decreasing $12.8 billion in August and $9.5 billion in July. VRDNs increased to $17.8 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Monday around noon.)
Prime money fund assets tracked by Crane Data decreased to $1.358 trillion, or 16.6% of taxable money funds' $8.203 trillion total. Among Prime money funds, CDs represent 15.0% (down from 15.1% a month ago), while Commercial Paper accounted for 23.5% (unchanged from a month ago). The CP totals are comprised of: Financial Company CP, which makes up 14.2% of total holdings, Asset-Backed CP, which accounts for 7.6%, and Non-Financial Company CP, which makes up 1.7%. Prime funds also hold 0.6% in US Govt Agency Debt, 5.8% in US Treasury Debt, 17.0% in US Treasury Repo, 1.5% in Other Instruments, 7.2% in Non-Negotiable Time Deposits, 12.3% in Other Repo, 15.5% in US Government Agency Repo and 1.0% in VRDNs.
Government money fund portfolios totaled $4.357 trillion (53.1% of all MMF assets), down from $4.430 trillion in August, while Treasury money fund assets totaled another $2.462 trillion (30.0%), down from $2.526 trillion the prior month. Government money fund portfolios were made up of 27.0% US Govt Agency Debt, 17.7% US Government Agency Repo, 33.7% US Treasury Debt, 20.8% in US Treasury Repo, 0.3% in Other Instruments. Treasury money funds were comprised of 77.6% US Treasury Debt and 22.0% in US Treasury Repo. Government and Treasury funds combined now total $6.819 trillion, or 83.1% of all taxable money fund assets.
European-affiliated holdings (including repo) decreased by $77.7 billion in September to $679.6 billion; their share of holdings fell to 8.3% from last month's 9.1%. Eurozone-affiliated holdings decreased to $486.5 billion from last month's $528.0 billion; they now account for 5.9% of overall taxable money fund holdings. Asia & Pacific related holdings were down at $325.0 billion (4.0% of the total) from last month's $326.8 billion. Americas related holdings decreased to $7.191 trillion from last month's $7.255 trillion; they now represent 87.7% of holdings.
The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (up $14.9 billion, or 0.9%, to $1.680 trillion, or 20.5% of assets); US Government Agency Repurchase Agreements (down $2.7 billion, or -0.3%, to $981.3 billion, or 12.0% of total holdings), and Other Repurchase Agreements (up $23.8 billion, or 14.1%, to $192.2 billion, or 2.3% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (up $11.1 billion to $193.1 billion, or 2.4% of assets), Asset-Backed Commercial Paper (down $0.4 billion to $103.7 billion, or 1.3%), and Non-Financial Company Commercial Paper (down $10.6 billion to $23.0 billion, or 0.3%).
The 20 largest Issuers to taxable money market funds as of Sept. 30, 2026, include: the US Treasury ($3.477T, 42.4%), Fixed Income Clearing Corp ($1.069T, 13.0%), Federal Home Loan Bank ($854.3B, 10.4%), JP Morgan ($299.0B, 3.6%), RBC ($226.1B, 2.8%), Federal Farm Credit Bank ($217.4B, 2.6%), Citi ($188.9B, 2.3%), Wells Fargo ($178.3B, 2.2%), BNP Paribas ($170.0B, 2.1%), Goldman Sachs ($118.5B, 1.4%), Bank of America ($100.1B, 1.2%), Credit Agricole ($84.0B, 1.0%), Sumitomo Mitsui Banking Corp ($69.1B, 0.8%), Barclays PLC ($65.3B, 0.8%), Mitsubishi UFJ Financial Group Inc ($62.2B, 0.8%), Toronto-Dominion Bank ($61.5B, 0.7%), the Federal National Mortgage Association ($60.9B, 0.7%), Bank of Montreal ($55.6B, 0.7%), Canadian Imperial Bank of Commerce ($54.9B, 0.7%) and Mizuho Corporate Bank Ltd ($51.5B, 0.6%).
In the repo space, the 10 largest Repo counterparties (dealers) with the amount of repo outstanding and market share (among the money funds we track) include: Fixed Income Clearing Corp ($1.050T, 36.8%), JP Morgan ($287.1B, 10.1%), Citi ($186.2B, 6.5%), RBC ($174.8B, 6.1%), Wells Fargo ($166.0B, 5.8%), BNP Paribas ($157.5B, 5.5%), Goldman Sachs ($115.1B, 4.0%), Bank of America ($71.0B, 2.5%), Credit Agricole ($65.3B, 2.3%) and Sumitomo Mitsui Banking Corp ($56.8B, 2.0%).
The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: RBC ($51.3B, 8.6%), Toronto-Dominion Bank ($39.5B, 6.6%), Bank of America ($29.2B, 4.9%), ING Bank ($26.6B, 4.5%), Mizuho Corporate Bank Ltd ($23.6B, 4.0%), Mitsubishi UFJ Financial Group Inc ($21.6B, 3.6%), Bank of Montreal ($20.8B, 3.5%), Barclays PLC ($20.8B, 3.5%), Fixed Income Clearing Corp ($19.2B, 3.2%) and Credit Agricole ($18.7B, 3.1%).
The 10 largest CD issuers include: Toronto-Dominion Bank ($18.6B, 9.1%), Mitsubishi UFJ Financial Group Inc ($13.2B, 6.5%), Wells Fargo ($11.8B, 5.8%), Sumitomo Mitsui Banking Corp ($11.4B, 5.6%), Credit Agricole ($11.2B, 5.5%), Bank of Montreal ($8.7B, 4.3%), Bank of Nova Scotia ($8.6B, 4.2%), Barclays PLC ($8.6B, 4.2%), Bank of America ($8.3B, 4.0%) and Canadian Imperial Bank of Commerce ($8.2B, 4.0%).
The 10 largest CP issuers (we include affiliated ABCP programs) include: RBC ($28.8B, 9.9%), Toronto-Dominion Bank ($17.4B, 5.9%), ING Bank ($16.4B, 5.6%), Bank of Montreal ($12.1B, 4.2%), JP Morgan ($11.8B, 4.0%), Barclays PLC ($11.7B, 4.0%), National Bank of Canada ($9.8B, 3.4%), Capitolis Inc ($9.4B, 3.2%), Mitsubishi UFJ Financial Group Inc ($8.4B, 2.9%) and Guggenheim Treasury Services ($7.3B, 2.5%).
The largest increases among Issuers include: Fixed Income Clearing Corp (up $108.5B to $1.069T), the Federal Home Loan Bank (up $30.3B to $854.3B), Goldman Sachs (up $22.7B to $118.5B), RBC (up $13.6B to $226.1B), Mizuho Corporate Bank Ltd (up $7.7B to $51.5B), BNY Mellon (up $7.4B to $14.9B), BNP Paribas (up $4.2B to $170.0B), Toronto-Dominion Bank (up $4.0B to $61.5B), Morgan Stanley (up $3.2B to $8.5B) and Banco Santander (up $3.0B to $31.4B).
The largest decreases among Issuers of money market securities (including Repo) in September were shown by: the US Treasury (down $211.1B to $3.477T), Barclays PLC (down $32.4B to $65.3B), Societe Generale (down $15.2B to $42.1B), JP Morgan (down $12.8B to $299.0B), Credit Agricole (down $12.2B to $84.0B), Citi (down $12.0B to $188.9B), Deutsche Bank AG (down $8.4B to $27.5B), Nomura (down $8.2B to $21.7B), the Federal Home Loan Mortgage Corp (down $8.0B to $49.5B) and Wells Fargo (down $5.5B to $178.3B).
The United States remained the largest segment of country-affiliations; it represents 82.2% of holdings, or $6.739 trillion. Canada (5.5%, $452.3B) was in second place, while France (4.2%, $340.6B) ranked third. Japan (3.1%, $251.4B) occupied fourth place. The United Kingdom (1.8%, $145.7B) remained in fifth place. Netherlands (0.7%, $54.7B) was sixth, followed by Australia (0.7%, $53.5B), Germany (0.6%, $45.4B), Spain (0.5%, $45.1B), and Sweden (0.3%, $23.8B). (Note: Crane Data attributes Treasury and Government repo to the dealer's parent country of origin, though money funds themselves "look-through" and consider these U.S. government securities. All money market securities must be U.S. dollar-denominated.)
As of Sept. 30, 2026, Taxable money funds held 49.2% (up from 47.2%) of their assets in securities maturing Overnight, and another 9.8% maturing in 2-7 days (up from 6.2%). Thus, 59.0% in total matures in 1-7 days. Another 11.8% matures in 8-30 days, while 9.6% matures in 31-60 days. Note that over three-quarters, or 80.4% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-90 days, holds 6.4% of taxable securities, while 8.4% matures in 91-180 days, and just 4.8% matures beyond 181 days.
Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be sent out Friday, and we'll be writing our regular monthly update on the new September data for Monday's News. But we also already uploaded a separate and broader Portfolio Holdings data set based on the SEC's Form N-MFP filings on Thursday. (We continue to merge the two series, and the N-MFP version is now available via our Portfolio Holdings file listings to Money Fund Wisdom subscribers.) Our new N-MFP summary, with data as of September 30, includes holdings information from 1041 money funds (up 15 from last month), representing assets of $8.394 trillion (down from $8.503 trillion a month ago). Prime MMFs fell to $1.238 trillion (down from $1.239 trillion), or 14.8% of the total. We review the new N-MFP data and we also look at our revised MMF expense data, which shows charged expenses were mostly flat and money fund revenues fell to $21.7 billion (annualized) in September.
Our latest Form N-MFP Summary for All Funds (taxable and tax-exempt) shows Treasuries and Repurchase Agreements (Repo) remain the largest types of portfolio holdings in money market funds. Treasury holdings in money market funds now total $3.483 trillion (down from $3.675 trillion), or 41.5% of all assets, while Repo holdings rose to $2.871 trillion (up from $2.830 trillion), or 34.2% of all holdings. Government Agency securities total $1.194 trillion (up from $1.171 trillion), or 14.2%. Holdings of Treasuries, Government agencies and Repo (almost all of which is backed by Treasuries and agencies) combined total $7.547 trillion, or a massive 89.9% of all holdings.
The Other category (primarily Time Deposits) totals $152.7 billion (up from $136.9 billion), or 1.8%, and Commercial Paper (CP) totals $330.3 billion (up from $329.8 billion), or 3.9% of all holdings. Certificates of Deposit (CDs) total $204.2 billion (down from $205.8 billion), 2.4%, and VRDNs account for $159.9 billion (up from $154.7 billion), or 1.9% of money fund securities.
Broken out into the SEC's more detailed categories, the CP totals were comprised of: $193.1 billion, or 2.3%, in Financial Company Commercial Paper; $103.6 billion, or 1.2%, in Asset Backed Commercial Paper; and $33.5 billion, or 0.4%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($1.714 trillion, or 20.4%), U.S. Govt Agency Repo ($982.5 billion, or 11.7%) and Other Repo ($174.0 billion, or 2.1%).
The N-MFP Holdings summary for the Prime Money Market Funds shows: CP holdings of $276.8 billion (up from $276.4 billion), or 22.3%; Repo holdings of $573.2 billion (up from $495.1 billion), or 46.3%; Treasury holdings of $80.0 billion (down from $172.7 billion), or 6.5%; CD holdings of $174.1 billion (down from $176.5 billion), or 14.1%; Other (primarily Time Deposits) holdings of $112.5 billion (up from $96.0 billion), or 9.1%; Government Agency holdings of $8.6 billion (down from $9.1 billion), or 0.7%; and VRDN holdings of $13.4 billion (up from $13.2 billion), or 1.1%.
The SEC's more detailed categories show CP in Prime MMFs made up of: $175.8 billion (up from $163.4 billion), or 14.2%, in Financial Company Commercial Paper; $79.9 billion (down from $81.5 billion), or 6.4%, in Asset Backed Commercial Paper; and $21.1 billion (down from $31.6 billion), or 1.7%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($218.7 billion, or 17.7%), U.S. Govt Agency Repo ($204.1 billion, or 16.5%), and Other Repo ($150.4 billion, or 12.1%).
In related news, money fund charged expense ratios (Exp%) were mostly flat in September. Our Crane 100 Money Fund Index and Crane Money Fund Average were 0.26% and 0.36%, respectively, as of September 30, 2026. Crane Data revises its monthly expense data and gross yield information after the SEC updates its latest Form N-MFP data the morning of the 6th business day of the new month. (They posted this info Thursday morning, so we revised our monthly MFI XLS spreadsheet and historical craneindexes.xlsx averages file to reflect the latest expenses, gross yields, portfolio composition and maturity breakout.) Visit our "Content" page for the latest files.
Our Crane 100 Money Fund Index, a simple average of the 100 largest taxable money funds, shows an average charged expense ratio of 0.26% unchanged from last month's level (also 18 bps higher than 12/31/21's 0.08%). The Crane Money Fund Average, a simple average of all taxable MMFs, showed a charged expense ratio of 0.36% as of September 30, 2026, unchanged from the month prior and slightly below the 0.40% at year-end 2019.
Crane Data's latest monthly Money Fund Market Share rankings show assets lower among the largest U.S. money fund complexes in September, after being higher in August. Assets have increased in 22 of the past 27 months (April 2025, March 2026, April 2026, July 2026 and September 2026 saw declines). Money market fund assets fell by $51.0 billion, or -0.6%, last month to $8.298 trillion. Total MMF assets decreased by $56.8 billion, or -0.7%, over the past 3 months, and they've increased by $585.9 billion, or 7.6%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by Morgan Stanley, DWS, BNY Dreyfus, HSBC and Goldman Sachs, which grew assets by $12.5 billion, $6.8B, $5.7B, $5.2B and $3.7B, respectively. Declines in September were seen by Fidelity, State Street, American Funds, Federated Hermes and Vanguard, which decreased by $24.5 billion, $16.3B, $7.2B, $5.3B and $4.8B, respectively. Our domestic U.S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product. The combined "Family & Global Rankings" are available to Money Fund Wisdom subscribers. We review the latest market share totals, and look at money fund yields, which were higher in September.
Over the past year through Sept. 30, 2026, JPMorgan (up $138.4B, or 16.7%), Fidelity (up $95.5B, or 5.9%), Morgan Stanley (up $78.1B, or 28.1%), Invesco (up $70.5B, or 45.2%) and BlackRock (up $67.4B, or 10.1%) were the largest gainers. Invesco, JPMorgan, BlackRock, DWS and HSBC had the largest asset increases over the past 3 months, rising by $58.2B, $36.3B, $12.5B, $10.1B and $8.8B, respectively. The largest decline over 12 months was seen by: Allspring (down $24.9B), American Funds (down $11.7B), Federated Hermes (down $5.0B), PGIM (down $3.4B) and RBC (down $3.4B). The largest declines over 3 months included: SSIM (down $46.8B), Allspring (down $29.7B), Vanguard (down $21.2B), Fidelity (down $18.6B) and Northern (down $16.2B).
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.716 trillion, or 20.7% of all assets. Fidelity was down $24.5B in September, down $18.6B over 3 mos., and up $95.5B over 12 months. JPMorgan ranked second with $966.2 billion, or 11.6% market share (down $4.3B, up $36.3B and up $138.4B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $742.7 billion, or 8.9% of assets (down $4.8B, down $21.2B and up $31.3B). BlackRock ranked fourth with $733.1 billion, or 8.8% market share (up $1.7B, up $12.5B and up $67.4B), while Schwab was the fifth largest MMF manager with $698.7 billion, or 8.4% of assets (down $2.2B, up $8.3B and up $32.1B for the past 1-month, 3-mos. and 12-mos.).
Federated Hermes was in sixth place with $500.6 billion, or 6.0% (down $5.3B, down $14.0B and down $5.0B), while Goldman Sachs was in seventh place with $463.9 billion, or 5.6% of assets (up $3.7B, down $8.4B and up $39.6B). Morgan Stanley ($356.0B, or 4.3%) was in eighth place (up $12.5B, up $8.8B and up $78.1B), followed by BNY Dreyfus ($341.7B, or 4.1%; up $5.7B, down $12.8B and up $16.0B). SSIM was in 10th place ($284.5B, or 3.4%; down $16.3B, down $46.8B and up $20.4B).
The 11th through 20th-largest U.S. money fund managers (in order) include: Invesco ($226.4B, or 2.7%), Allspring ($205.8B, or 2.5%), Northern ($198.2B, or 2.4%), First American ($197.8B, or 2.4%), American Funds ($148.1B, or 1.8%), UBS ($118.8B, or 1.4%), HSBC ($61.0B, or 0.7%), DWS ($52.3B, or 0.6%), Franklin Templeton ($47.1B, or 0.6%) and T Rowe Price ($46.6B, or 0.6%). Crane Data currently tracks 64 U.S. MMF managers, unchanged from last month.
When European and "offshore" money fund assets -- those domiciled in places like Ireland, Luxembourg and the Cayman Islands -- are included, the top 10 managers are the same as the domestic list, except: BlackRock moves up to the No. 3 spot and Vanguard moves down to the No. 4 spot. Goldman Sachs moves up to the No. 6 spot, while Federated Hermes moves down to the No. 7 spot. Global Money Fund Manager Rankings include the combined market share assets of our MFI XLS (domestic U.S.) and our MFI International ("offshore") products.
The largest Global money market fund families include: Fidelity ($1.741 trillion), JP Morgan ($1.301 trillion), BlackRock ($1.086 trillion), Vanguard ($742.7B) and Schwab ($698.7B). Goldman Sachs ($635.0B) was in sixth, Federated Hermes ($520.2B) was seventh, followed by Morgan Stanley ($481.6B), BNY Dreyfus ($407.2B) and SSIM ($345.3B), which round out the top 10. These totals include "offshore" U.S. Dollar money funds, as well as Euro and Pound Sterling (GBP) funds converted into U.S. dollar totals.
The October issue of our Money Fund Intelligence and MFI XLS, with data as of 9/30/26, shows that yields were up in September across all of the Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 763), was 3.57% (up 16 bps) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was up 8 bps to 3.48%. The MFA's Gross 7-Day Yield was at 3.93% (up 16 bps), and the Gross 30-Day Yield was up 8 bps at 3.84%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 9/30/26 on Thursday.)
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 3.68% (up 18 bps) and an average 30-Day Yield at 3.58% (up 9 bps). The Crane 100 shows a Gross 7-Day Yield of 3.94% (up 18 bps), and a Gross 30-Day Yield of 3.84% (up 9 bps). Our Prime Institutional MF Index (7-day) yielded 3.81% (up 19 bps) as of September 30. The Crane Govt Inst Index was at 3.66% (up 16 bps) and the Treasury Inst Index was at 3.65% (up 16 bps). Thus, the spread between Prime funds and Treasury funds is 16 basis points, and the spread between Prime funds and Govt funds is 15 basis points. The Crane Prime Retail Index yielded 3.55% (up 17 bps), while the Govt Retail Index was 3.36% (up 14 bps), the Treasury Retail Index was 3.41% (up 16 bps from the month prior). The Crane Tax Exempt MF Index yielded 2.89% (up 81 bps) at the end of September.
Gross 7-Day Yields for these indexes to end September were: Prime Inst 4.05% (up 19 bps), Govt Inst 3.90% (up 16 bps), Treasury Inst 3.91% (up 16 bps), Prime Retail 4.03% (up 17 bps), Govt Retail 3.90% (up 14 bps) and Treasury Retail 3.91% (up 16 bps). The Crane Tax Exempt Index rose to 3.28% (up 81 bps). The Crane 100 MF Index returned on average 0.29% over 1-month, 0.88% over 3-months, 2.57% YTD, 3.62% over the past 1-year, 4.40% over 3-years annualized, 3.62% over 5-years, and 2.29% over 10-years.
The total number of funds, including taxable and tax-exempt, was unchanged in September at 874. There are currently 763 taxable funds, unchanged from the previous month, and 111 tax-exempt money funds (unchanged from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
The October issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Wednesday morning, features the articles: "AI Impact on Brokerage Sweep and Deposits Returns to Fore," which discusses AI's potential impact on low-yielding brokerage sweep and bank deposit options; "European MFS Paris Focuses on Tokenization, Growth," which reviews highlights from Crane Data's latest conference; and "ICI Worldwide: MMFs Rise in Q2'26 to Record $13.7 Trillion," which recaps the latest global money fund statistics. We also sent out our MFI XLS spreadsheet Wednesday a.m., and we've updated our Money Fund Wisdom database with 9/30/26 data. Our October Money Fund Portfolio Holdings are scheduled to ship on Friday, Oct. 9, and our October Bond Fund Intelligence is scheduled to go out Thursday, Oct. 15. (Note: Thanks to those of you who supported our European Money Fund Symposium in Paris! Mark your calendars for next year's show in London, Sept. 23-24, 2027!)
MFI's "AI Impact on Brokerage Sweep" story says, "In April, we first heard and wrote about AI's potential impact on low-yielding brokerage sweep and bank deposit options, and it was a big topic during Q1 earnings calls. Then things were quiet during the second and third quarters of this year. But suddenly the issue resurfaced late last month when The Wall Street Journal featured a piece in its 'Heard on the Street' column titled, 'In the Age of AI, Cash Is Still King.'"
It continues, "Author Telis Demos writes, 'When it comes to financial stocks these days, investors seem most concerned about their ability to attract, and hang on to, customers' cash. For many years, cash was trash, as the saying goes. Savings accounts, short-term Treasury bills and money-market funds paid little yield when interest rates were near zero.... Fast forward to today. The Federal Reserve's rate hikes starting in 2022 reset the bar for what cash could pay out to investors.'"
We write in our "European MFS" article, "Crane Data hosted its latest European Money Fund Symposium conference in Paris late last month, where a record 250 money market professionals discussed rates, tokenization, record asset levels and a number of other hot topics in '`offshore' cash. The opening session of day 2, 'Tokenized Money Funds, Stablecoins & More,' featured Brenden Carroll of Dechert LLP, Andrew Paranthoiene of S&P Global Ratings and Rachel Thornton of Northern Trust. Paranthoiene says about tokenization, 'This is sort of the question of the day. The balloon of ESG is sort of fading away, but one of the things that we are thinking about ... from a wider market perspective is the evolution, or the revolution, in regards to tokenized money market funds.'"
The story continues, "He explains, 'For decades, Ireland and Luxembourg have been known as the traditional hubs of liquidity [with] infrastructure and support [for] bank deposits, money funds, CP, custodians, and payment rails built over many years. Today, however, we're witnessing the emergence of something different as these two centers position themselves as not merely hubs for traditional liquidity, but also for digital liquidity.'"
Our "ICI Worldwide" article says, "ICI's latest 'Worldwide Regulated Open-End Fund Assets and Flows, Second Quarter 2026,' shows that money fund assets globally rose by $250.0 billion, or 1.9%, in Q2'26 to a record $13.720 trillion. Increases were led by a sharp jump in money funds in the U.S. and China, while Ireland and Brazil also showed gains. Meanwhile, money funds in France and the Republic of Korea were lower. MMF assets worldwide increased by $1.406 trillion, or 11.4%, in the 12 months through 6/30/26, and money funds in the U.S. now represent 57.6% of worldwide assets. Asian money fund totals remained above European money fund totals."
It continues, "ICI's release says, 'Worldwide regulated open-end fund assets, excluding funds of funds, increased 9.0% to $95.20 trillion at the end of the second quarter of 2026. Worldwide net cash inflow to all funds was $1.0 trillion in the second quarter, compared with $934 billion of net inflows in the first quarter of 2026. The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA), the organization of national fund associations. The collection for the second quarter of 2026 contains statistics from 44 jurisdictions.'"
MFI also includes the News brief, "ICI: MF Assets Plunge on Month-End." It says, "The Investment Company Institute's latest weekly 'Money Market Fund Assets' report shows assets plummeting $45.4 billion to $7.891 trillion. Assets saw a record high of $7.979 trillion four weeks ago. MMF assets are up by $526 billion, or 7.1%, over the past 52 weeks (through 9/30/26). Crane Data's MFI XLS shows money fund assets down $50.8 billion to $8.298 trillion in September. ICI's monthly 'Trends' also showed shareholder accounts in MMFs hitting a record 90.7 million in August."
Another News brief, "State Street Published 'Building trust in digital market infrastructure: The role of tokenized MMFs,' which explains, ‘Although still small relative to traditional markets, tokenized money market funds (MMFs) have expanded rapidly in recent years. This growth is driven by increasing institutional use of these products as an efficient form of collateral and as a vehicle to actively generate yield.' (See also the release, 'State Street Galaxy Onchain Liquidity Sweep Fund Goes Live on Stellar.')"
A third News brief, "Northern Trust Asset Management Launches Stablecoin Cash Reserves Portfolio," says, "A press release tells us, 'Northern Trust Asset Management ... announced the launch of the Northern Institutional Funds Stablecoin Cash Reserves Portfolio (NSCXX). The Stablecoin Cash Reserves Portfolio is a U.S. government money market fund designed to support stablecoin issuers' cash reserve needs.... This Stablecoin Cash Reserves Portfolio launch follows Northern Trust Asset Management's entry into the digital assets market earlier this year, after the launch of a tokenized share class of the NIF Treasury Instruments Portfolio.'"
A sidebar, "Crane 100 Index Gets Notice," says, "Our Crane 100 Money Fund Index is getting some notice as it climbs in reaction to the Fed's recent interest rate hike. The Wall Street Journal writes in 'A Simple Way to Take Advantage of Higher Yields,' 'Nobody likes to catch falling knives, as the old Wall Street saying goes. Except that with shorter-term bonds, at least you're wearing some protective gear. Currently, 2-year Treasurys are yielding over 4.9%. That isn't much less than what the 10-year Treasury is paying at over 5.2%.'"
Our October MFI XLS, with September 30 data, shows total assets falling $50.8 billion to $8.298 trillion, after jumping $78.5 billion in August, falling $65.6 billion in July and increasing $49.5 billion in June. They increased $193.2 billion in May, decreased $102.1 billion in April and $56.6 billion in March, but increased $94.0 billion in February. Assets rose $38.5 billion in January, $123.5 billion in December, $129.3 billion in November, and $141.5 billion last October.
Our broad Crane Money Fund Average 7-Day Yield was up 17 bps at 3.57%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 17 bps at 3.68% in September. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 3.93% and 3.94%. Charged Expenses averaged 0.36% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 9/30/26 on Thursday, 10/8.) The average WAM (weighted average maturity) for the Crane MFA was 36 days (down 2 days) and the Crane 100 WAM was down 3 days from the previous month at 36 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
While we're still recovering for our European Money Fund Symposium, which took place in Paris 2 weeks ago, we're also ramping up preparations for our next Money Fund University conference, which will be in Greenwich, Conn., Dec. 17-18. Crane's Money Fund University is designed for those new to the money market fund industry or those in need of a concentrated refresher on the basics. The event also focuses on hot topics like money market fund regulations, money fund alternatives, offshore markets, and other recent industry trends. Our educational conference features a faculty of the money fund industry's top lawyers, strategists, and portfolio managers, and the Greenwich show will include our Holiday cocktail party Dec. 17 and a free product training session for Crane Data clients. We review the MFU agenda and some other upcoming conferences, below. (Note: Thanks again to those of you who supported Crane's European Money Fund Symposium, and mark your calendars for next year's show in London, Sept. 23-24, 2027!)
Money Fund University offers a 2-day crash course on money market mutual funds, educating attendees on the history of money funds, the Fed, interest rates, ratings, rankings, and money market instruments such as commercial paper, Treasury bills, CDs and repo. We also cover portfolio construction and credit analysis. Registrations are $750 and are now being taken, and the latest agenda is available here. (E-mail us to request the latest brochure, and make your hotel reservations here!)
The morning of Day One (12/17/26) of the 2026 MFU agenda includes: Welcome to Money Fund University, History & Current State of Money Funds with Peter Crane of Crane Data; The Federal Reserve & Money Markets with Katie Craig of Bank of America; Ratings, Monitoring & Performance with Steven Johnson of Fitch Ratings, Andrea Valverde of S&P Global and Peter Crane of Crane Data; and, Instruments of the Money Markets Intro with Pankaj Vohra of J.P. Morgan Securities.
Day One's afternoon agenda includes: Repurchase Agreements with Dan Boate of J.P. Morgan Securities; Treasuries & Govt Agencies with Sue Hill of Federated Hermes and Matt Lachance of TD Securities; Commercial Paper & ABCP with Greg Jensen of Citi Global Markets; CDs, TDs & Bank Debt with Vanessa McMichael of Wells Fargo Securities; and, Credit Analysis & Portfolio Management with Peter Henshaw and Keith Lawler of BNY Dreyfus. (Note: Crane Data will host its Holiday Party alongside MFU. Clients and friends are welcome to join us at the Hyatt Regency in Greenwich, Conn. on Thursday, Dec. 17 from 5-7:30pm!)
Day Two's (12/18) agenda includes: Money Fund Regulations: 2a-7 Basics & History with Stephen Cohen of Dechert LLP and Geena Marzouca of Stradley Ronon Stevens & Young; Tokenized Money Funds, Stablecoins & ETFs with Stephen Cohen of Dechert LLP and Jon-Luc Dupuy of K&L Gates LLP; European MMFs & Ultra-Short Bond Funds with Peter Crane of Crane Data and John Hunt of Sullivan & Worcester LLP; and Money Fund Data & Wisdom Demo/Training with Peter Crane. The conference ends with its annual MFU "Graduation" ceremony (where diplomas are given to attendees).
New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing should benefit from our comprehensive program. Even experienced professionals may enjoy a refresher course and the opportunity to interact with peers in an informal setting. Exhibit space for Crane's Money Fund University is $2,000, and sponsorship opportunities are $3K (Bronze), $4K (Silver), and $5K (Gold). A block of rooms has been reserved at The Hyatt Regency Greenwich. (Please reserve before 11/20.)
We'd like to thank our past MFU sponsors -- Northcross Capital, Federated Hermes, Fitch Ratings, CastleOak Securities, BlackRock, TD Securities, Capitolis, Northern Trust, Dechert, J.P. Morgan Asset Management, K&L Gates, Dreyfus, Citi and GLMX -- for their support, and we look forward to seeing you in Greenwich in December! E-mail Pete Crane (pete@cranedata.com) for the latest brochure or visit www.moneyfunduniversity.com to register or for more details.
Mark your calendars too for our next Bond Fund Symposium, which will be held in Philadelphia, Pa., on March 22-23, 2027. (Click here to see last year's agenda.) Bond Fund Symposium is the only conference devoted entirely to bond mutual funds, bringing together bond fund managers, marketers, and professionals with fixed-income issuers, investors and service providers. The majority of the content is aimed at the growing ultra-short and conservative ultra-short bond fund marketplace.
Crane Data is also starting preliminary preparations for our next big show, Money Fund Symposium, which is scheduled for June 23-25, 2027 in Philadelphia, Pa. The agenda will be released later this fall and registrations will open soon. Let us know if you'd like more details on any of our events, and we hope to see you in Paris in September or in Greenwich in December this year, or in Philadelphia in March or June 2027. Thanks to all of our speakers and sponsors and for your support!
Crane Data hosted its latest European Money Fund Symposium conference in Paris late last month, where a record 250 money market professionals discussed rates, tokenization, record asset levels and a number of other hot topics in "offshore" cash. The opening session of day 2, "Tokenized Money Funds, Stablecoins & More," was moderated by our Peter Crane and featured Brenden Carroll of Dechert LLP, Andrew Paranthoiene of S&P Global Ratings and Rachel Thornton of Northern Trust. Paranthoiene says about tokenization, "This is sort of the question of the day.... The balloon of ESG is sort of fading away.... But one of the things that we are thinking about ... from a wider market perspective is the evolution, or the revolution, in regards to tokenized money market funds." (Note: Thanks again to those of you who supported our European Money Fund Symposium in Paris, and mark your calendars for next year's show in London, Sept. 23-24, 2027!)
He explains, "For decades, Ireland and Luxembourg have been known as the traditional hubs of liquidity [with] infrastructure and support [for] bank deposits, money market funds, commercial paper, custodians, and payment rails built over many years. Today, however, we're witnessing the emergence of something different as these two centers position themselves as not merely hubs for traditional liquidity, but also for digital liquidity."
The S&P MD tells us, "Tokenized money market funds, tokenized deposits, stablecoins, and digital asset infrastructure are beginning to reshape how liquidity is created, transferred, and managed. So, what is a tokenized money market fund? There's a lot of particular detail on this fund, but hopefully it provides sort of the characteristics that people are starting to become more familiar with. A tokenized money market fund is still a money market fund. And the token represents an investor's share of a unit in that fund. Sounds simple, right?”
Paranthoiene says, "Everyone's obviously becoming familiar not only with the portfolio credit quality and liquidity, but also the new components of the operating layer, the ownership record, investor access, transfer processes, settlement workflows, blockchains, permissioned wallets, smart contract governance. All these things are the new additions to what is traditionally a simple, straightforward, vanilla investment product that serves the industry so well."
He continues, "So, in terms of the structures of a tokenized money market fund, they sit on a spectrum. In a digital twin model, which we're going to explore a little bit more, their traditional transfer agent register remains authoritative, and the token mirrors the fund interest. In a fully native structure, the on-chain register is the primary ownership record. And of course, in a traditional way, it would be a hybrid approach, with long-term opportunities to connect regulated money market funds with tokenized deposits, stablecoins, securities, and of course collateral."
Paranthoiene then comments, "So, when we think about the differences between Ireland and Luxembourg, there's obviously a lot of similarities in where the particular push is. Ireland obviously has scale.... But Luxembourg is certainly leading as a stronger legal and regulatory information pathway for tokenized funds at the moment. While Ireland's differentiation is the scale and specialization in its money market fund ecosystem, which would make it Europe's leading application for tokenized institutional liquidity once implementation paths do mature."
He states, "Ireland would be classified as the most conservative in terms of its digital twin approach. Luxembourg would be classified as being further down the legal path to a native tokenization, while Hong Kong [has] the idea of tokenizing the entire market. So, in that regard, Ireland tokenizes the fund, Luxembourg tokenizes the legal instrument, but Hong Kong is tokenizing the entire market. So, in particular for Ireland, it's not starting from scratch. It has deep expertise in funds, custody, service international banking. It's trusted as an institutional and credible location for establishing supervision from the CBI. The work is obviously moving from supervision to technology, being a trusted and resilient financial claims center."
Paranthoiene explains, "So, when we think about Europe's digital liquidity opportunity, it begins with an established liquidity franchise.... I think that it's fair to say that the tokenized discussion is already moving from theory and into practical implementation. But the broader European message is important. Existing money market funds do not need to be rebuilt to participate in digital finance. The established funds can instead connect to new distribution, transfer and settlement channels.... Tokenization may therefore be less about creating new assets and more about creating new ways to access and manage existing ones."
He adds, "Tokenization can change how money market fund liquidity is accessed, transferred, settled and used as collateral. It can also connect funds to more direct treasury systems. But the fundamentals remain -- credit quality, portfolio liquidity and investor rights still matter, as do the manager, the depository and all the supporting infrastructure that goes into operating a fund. Greater connectivity can improve the efficiency but may amplify liquidity, operational and the legal risks. So, when assessing a tokenized money market fund, do not focus only on the speed of the token. Focus on the liquidity of the fund and the liquidity available when everyone wants to move at once."
Thornton then tells the EMFS crowd, "It's great to be here today talking to you on behalf of Northern Trust, but also Irish Funds. I am the Chair of the Irish Funds Money Market Fund Working Group.... Obviously, we've all heard about Ireland being the leading cross-border domicile for money market funds. And I suppose importantly, over the last two months, we have seen some launches of real-world tokenized money market funds from some of the biggest global asset managers."
She says, "In the last two months, we have seen Aviva, Schroders, and BlackRock launch tokenized money market fund share classes within Ireland. So really exciting news and a lot of hard work done with the CBI, working with the managers, and the Funds Association.... Money market funds [are] being the first real use case [of tokenization]. So, we see Ireland's approach as being practicable and flexible ... working in compliance with existing regulations."
Thornton adds, "The Irish Funds Money Market Fund Working Group published an article just two weeks ago that demonstrates that path. It does focus on very much the digital twin model. The name of the paper is The Path to Fund Innovation, which is a really important piece in the digital twin model. To Andrew's point, is it a revolution or an evolution? We certainly see it as an evolution and probably is the beginning path forward to the fully native type of fund."
She continues, "So, the digital twin model still seems authoritative off-chain. So that is the traditional TA registered as the definitive record of legal ownership and settlement clarity. Then we've got the on-chain token layer. And this is providing the digitally verifiable representation of entitlements and obviously leads to a more automated transfer mechanism. It's both for the on-chain piece that uses the smart contracts to manage the life cycle of a money market fund."
Lastly, Thornton tells us, "Talking specifically around the tokenized money market fund, I think the overall ecosystem is super, super important. Tokenizing share class or fully native money market fund is only one part of the journey without atomic settlement.... Some of the recently tokenized offer 24-7. They offer Saturday and Sunday transfers, but an investor can't get their cash out on a Saturday, etc. So, there's a bit of work still to come on the whole ecosystem and the rails with the cash piece.... Just to sort of close off in terms of how important it is for Northern from an asset servicing or custody bank, along with my peers from BNY, JPM, State Street, etc., we are talking to clients almost every day on tokenization."
Carroll comments, "Just to sort of start with some of the question that you have raised, is it evolutionary or revolutionary? I tend to think of it as not so binary. I think in very simple terms, it's just an evolution in the way people maintain records.... There's been a sea change in the U.S. in its approach to all things crypto or crypto adjacent, including blockchain. I remember working on the first fund sponsor to natively issue its shares on a public permissionless blockchain [Franklin Templeton].... That was back in 2021. It took a lot of dialogue with a regulator at the time. The discussions we now have are totally different."
Tokenized money market funds, he says, "Sit in this trifecta where you have a product that is highly regulated, yield-bearing, and this token provides the same type of rights that a shareholder would otherwise have if they held their shares in more traditional form. But I think it's important to be clear-eyed about this technology for all the reasons that have already been discussed. This technology is never really going to take off and fully integrate itself into our financial services system if people can't trust the technology and know that they will have cash when they need it the most."
Finally, on Stablecoins, Carroll comments, "I think the amount of stablecoins has stalled somewhat, but our rules in the U.S. haven't even taken effect. I think where the payment stablecoins and money market funds sit; they can interact at a few different levels. On the one hand, sure, they can be competitors, just like money market funds could be to bank deposits and other places to put your cash. That's not new, that's existed for a while. The money fund industry is at times, I don't know how you'd say it, being like a complicated relationship with the banking industry."
The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows money fund assets plummeting $45.4 billion to $7.891 trillion. Assets rose $15.2 billion the previous week and decreased $52.0 billion the week before this. Assets saw a record high of $7.979 trillion four weeks ago. MMF assets are up by $526 billion, or 7.1%, over the past 52 weeks (through 9/30/26), with Institutional MMFs up $397 billion, or 9.0% and Retail MMFs up $109 billion, or 3.6%. Year-to-date in 2026, MMF assets are up by $158 billion, or 2.0%, with Institutional MMFs up $129 billion, or 2.8% and Retail MMFs up $29 billion, or 0.9%.
ICI's weekly release says, "Total money market fund assets decreased by $45.45 billion to $7.89 trillion for the week ended Wednesday, September 30, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $31.57 billion and prime funds decreased by $15.76 billion. Tax-exempt money market funds increased by $1.88 billion." ICI's stats show Institutional MMFs decreasing $39.0 billion and Retail MMFs decreasing $6.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $6.500 trillion (82.3% of all money funds), while Total Prime MMFs were $1.236 trillion (15.7%). Tax Exempt MMFs totaled $156.0 billion (2.0%).
It explains, "Assets of retail money market funds decreased by $6.47 billion to $3.11 trillion. Among retail funds, government money market fund assets decreased by $4.63 billion to $1.98 trillion, prime money market fund assets decreased by $3.70 billion to $985.73 billion, and tax-exempt fund assets increased by $1.86 billion to $141.56 billion." Retail assets account for 39.4% of the total, and Government Retail assets make up 63.7% of all Retail MMFs.
They add, "Assets of institutional money market funds decreased by $38.98 billion to $4.78 trillion. Among institutional funds, government money market fund assets decreased by $26.94 billion to $4.52 trillion, prime money market fund assets decreased by $12.05 billion to $249.94 billion, and tax-exempt fund assets increased by $20 million to $14.40 billion." Institutional assets accounted for 60.6% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have decreased by $48.0 billion to $8.294 trillion month-to-date in September (as of 9/30), assets reached an all-time high of $8.404 trillion on July 6. Assets increased $52.8 billion in August, decreased $61.4 billion in July, increased $58.6 billion in June, $208.6 billion in May, decreased by $108.8 billion in April, $49.3 billion in March, increased $99.5 billion in February, $32.9 billion in January, $126.3 billion in December, $132.8 billion in November, $142.1 billion in October and $105.2 billion last September. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than Crane's asset series.
In other news, our Crane 100 Money Fund Index, a simple average of the 100 largest taxable money market mutual funds' 7-day simple, net annualized yields, is getting some notice as it climbs in reaction to the Fed's recent interest rate hike. The Wall Street Journal writes in "A Simple Way to Take Advantage of Higher Yields," "Nobody likes to catch falling knives, as the old Wall Street saying goes. Except that with shorter-term bonds, at least you're wearing some protective gear."
The piece says, "Currently, 2-year Treasurys are yielding over 4.9%. That isn't much less than what the 10-year Treasury is paying at over 5.2%. Longer-term bonds have some additional yield built in for less quantifiable risks like long-term inflation or a surge in future issuance. Whether that is sufficient compensation can be very tough to think through. But investors don't have to be macro analysts. Either way, the relatively high yield on two-year notes and their shorter lifespan mean that it would take something quite extreme to generate overall losses for investors."
It adds, "Some investors might be willing to bet on the direction of rates. Others may want to let the market set their rate with a short-term instrument like a money-market fund. The Crane 100 Money Fund index is at a roughly 3.7% yield."
Federated Hermes' Debbie Cunningham also mentions our benchmark in "Don't fight the FRED." She asks, "What comes next? For cash managers and investors in the money markets, it's time to break out new bottles of champagne. Inflation is no joy. But the yields the industry is seeing, and forecasts, for liquidity offerings continue to be attractive. The Crane Data 100 Money Fund Index has hit 3.67% and is likely to climb. The Fed does not need to hike to keep the good times going -- just hold rates higher for longer."
Finally, a filing on the JPMorgan OnChain Liquidity-Token Money Market Fund," says, "Effective immediately, tokens of the Fund will be available on the Solana blockchain, a public blockchain network," while a press release titled, "Maybank Asset Management brings Tokenised Singapore Dollar Money Market Fund into Synthesys Network."
The latter tells us, "Maybank Asset Management Singapore ('MAMS') ... announced that its tokenised share class of Maybank Money Market Fund, is now accessible through Synthesys Network, developed by Synthesys, a Singapore-headquartered tokenisation infrastructure provider, extending the fund's reach to regulated distribution channels globally.
The Federal Reserve Bank of New York's "Liberty Street Economics" recently asked, "Who's Borrowing and Lending in Repo Markets?" The article states, "Repo markets play a vital role in the U.S. financial system. In this three-part series, we examine who participates in these markets, what trade-offs influence how different repo segments are structured, and why repos matter for monetary policy. Today's post introduces repo transactions, focusing on the major private-sector participants and why they engage in these markets." (Note: Thanks again to those of you who attended and supported our European Money Fund Symposium in Paris! Mark your calendars for next year's show in London, Sept. 23-24, 2027!)
It explains, "A repurchase agreement or repo is a financial transaction in which one party sells a security in exchange for cash, with the commitment to repurchase the same (or a closely related) security for a prespecified price on a future date. (From the perspective of the party buying the security and later reselling it, this transaction is called a reverse repo.) Repos are an essential component of the U.S. financial system, acting both as a source of funding and short-term investment for many financial institutions, as well as a marketplace for obtaining specific securities. Recent estimates assess the daily amount of outstanding agreements in the U.S. at around $13.5 trillion or 40 percent of U.S. GDP."
The blog comments, "The time between the initial sale and the repurchase, along with the price difference, determines the interest rate, known as the repo rate. Repo rates vary depending on a variety of factors, most notably the type of collateral accepted (the securities sold), maturity (the length of time between the initial sale and repurchase), counterparty, the size of the haircut (the difference between the value of the securities sold and cash delivered), and clearing (the process between the execution and final settlement of a transaction). Around 70 percent of repos are collateralized by U.S. Treasury securities and most have an overnight maturity. In terms of clearing, around 60 percent of repos are cleared through a central counterparty (35 percent) or through a third party (25 percent), while 40 percent are directly cleared between the buyer and seller (OFR 2025)."
It says, "Many different types of transactions take place in repo markets. For example, a dealer -- acting as an intermediary -- can purchase securities from levered investors like hedge funds (a reverse repo from the dealer's perspective), and also enter into a repo with other dealers or with cash lenders such as money market funds (MMFs) to sell the securities, thus ultimately channeling funds from cash lenders to cash borrowers. In tomorrow's post, we delve deeper into the microstructure of various segments of repo markets."
The piece states, "Repos can be traced back to the early 20th century. Repo market size and contracting conventions changed markedly in the 1980s following the failure of several dealers, amid a rising level and volatility of interest rates and growing supply of Treasury debt.... An important convention that has contributed to the liquidity and growth of repo markets is that repos involving Treasury and federal agency securities are exempt from the automatic stay under the U.S. Bankruptcy Code that, as the name suggests, comes into effect when a company files for bankruptcy and stays creditors from taking certain actions on account of their claims against the company. This means that if the cash borrower defaults during the life of the repo, the cash lender can generally terminate its repo contracts with the defaulting counterparty, sell the securities promptly, and avoid the delay and uncertainty of the bankruptcy process."
It continues, "In a repo, the party selling the security is interested in borrowing cash. The counterparty, however, may enter the repo transaction for one of two reasons: to invest cash and earn a return, or to obtain a specific security. The first motive makes a repo economically similar to other short-term money market instruments such as federal funds, Eurodollars, or commercial paper. Unlike in these markets, the transaction is collateralized: from the perspective of the cash lender, the securities reduce the risk of the trade."
The update adds, "Repos also play a key role in monetary policy implementation. In today's post we focus on private repos, returning to their use in central banks' toolkits in the third post of this series. Relative to the federal funds and Eurodollar and selected deposits markets, the landscape of private repo participants is more complex for two main reasons. First, there is a broader and more diverse set of ultimate borrowers and lenders. Second, dealers are instrumental intermediaries in repo markets. In the remainder of this post, we shed light on the first category, describing the key role of dealers in tomorrow's post."
It tells us, "The top cash borrowers in private repo markets are hedge funds. Hedge funds rely on repo markets for leverage to boost their returns. An example of a hedge fund strategy that uses repo is the so-called 'Treasury cash-futures basis trade.' In this strategy, a hedge fund purchases a Treasury security and sells a Treasury futures contract, which enables it to profit from the price differential. To amplify the return on the basis trade, hedge funds finance the purchase of the Treasury securities with cash borrowed in a repo that uses those securities as collateral.... Hedge fund borrowing in repo markets tripled over 2013-23, from $400 billion to $1.5 trillion; and then it doubled again in the following two years, reaching $3 trillion in late 2025. The next three largest borrowers in repo markets today are U.S. branches and agencies of foreign banks (FBOs), U.S. depository institutions (USDIs), and real estate investment trusts (REITs). Jointly, their outstanding borrowing in repo has ranged between $800 billion and $1.3 trillion since 2013."
Lastly, they write, "The main cash lenders in repo are MMFs. [B]etween January 2013 and January 2021, MMF lending increased by 90 percent, from under $600 billion to $1 trillion. In the following five years, MMF lending almost tripled, reaching $3 trillion in January 2026. Repo markets offer MMFs a short-term investment that meets their regulatory requirements on maturity and asset composition while providing flexibility to help manage investor redemptions. The second largest lenders in repo are hedge funds.
The second update in the NY Fed's series, "Follow the Cash! Microstructure of Repo Markets," tells us, "The repo market in the U.S. is a mosaic of segments with distinct participants and various settlement and clearing practices. Why do large cash lenders typically settle their trades through a third-party agent? Why does the interdealer market clear through a central counterparty? Why do levered investors favor bilateral trades? In the second post of this series, we follow the cash as it navigates through repo markets to better understand the costs and benefits that shape the existing market structures."
It concludes, "The various microstructures of repo segments observed in the U.S. reflect how a heterogeneous set of participants evaluate the trade-offs involved in repo transactions differently. Costs related to the settlement of securities led to the emergence of tri-party repo; balance sheet costs favor central clearing; meanwhile, creative contracting—such as netted packages—mitigates costs in bilateral, non-centrally cleared repos."
Finally, the third blog post, "The Role of Repos in Monetary Policy Implementation," says, "In the first two posts of this three-part series, we discussed private market participants that are active in repo markets for profit-making motives. Central banks are also active repo market participants, but their reasons often differ from those of private participants. In today's post, we discuss how central banks use repos to manage liquidity in the financial system and implement monetary policy."
