The half-year industry adjustment period has officially concluded with the end of the grace period for implementing T+1 fund transfer reforms in money market fund sales at the end of May.
Recently, numerous small and medium-sized banks have issued announcements sequentially, suspending subscription, scheduled investment, and transfer-in services for certain money market fund products.
Based on incomplete statistics, more than 30 banks have taken related measures, involving city commercial banks, rural commercial banks, and some private banks.
This adjustment stems from regulatory requirements for money market fund sales business issued by authorities last November.
According to the relevant regulations, fund sales institutions must strictly implement the "T+1" settlement mechanism for money market fund investment redemption proceeds. They are prohibited from using their own funds to prepay or otherwise advance confirmation of subscription units to effectively achieve rapid fund availability, with a six-month rectification transition period set for compliance.
The core objective of the new rules is to completely eliminate arbitrage opportunities exploiting the previous "T+2" fund transfer time gap, such as subscribing on a Thursday to capture weekend yields, and to strictly prohibit sales institutions from providing any form of advance funding or de facto "T+0" availability. A six-month rectification transition period was established for this policy.
Sources close to small and medium-sized banks indicated that this rectification addresses previous non-standard fund transfer practices for money funds by some institutions, leading them to temporarily halt subscriptions for system upgrades.
From the current situation, the most noticeably affected are certain small and medium-sized banks.
Unlike large banks with extensive cash management product suites and stronger client stickiness, many smaller banks previously relied on money market funds as a key tool for client retention. Some institutions even built functionalities like account balance management and automatic subscription/redemption around these funds, competing with larger players on liquidity experience.
Following the completion of the rectification, this advantage is diminishing. Some banks have chosen to suspend subscriptions for related products, while others are maintaining existing holdings but no longer accepting new inflows.
Industry insiders believe this adjustment is not targeting money market fund products themselves, but rather a return of the sales process to the operational rules governing funds.
As publicly offered fund products, the unit confirmation, yield calculation, and fund transfers for money market funds should be executed according to the fund contracts. With the exit of the advance funding model, the boundary between fund products and bank deposits will become clearer.
For small and medium-sized banks, the short-term impact is more pronounced at the client relationship management level.
Against the backdrop of persistently declining deposit interest rates in recent years, money market funds have gradually become a significant component within bank wealth management systems. The convenience of fund usage is closely tied to why some clients choose to hold money market funds through bank channels. With the adjustment of related functions, some client funds may flow back into deposits or move towards platforms and institutions with stronger cash management capabilities.
This also implies that small and medium-sized banks will need to find new methods for client retention moving forward.
From an industry development trend perspective, following the completion of the T+1 rectification for money funds, the competitive logic around cash management services among banks is changing. The differentiated advantage once formed by fund arrival speed is gradually disappearing, while the importance of product selection capability, account service capability, and comprehensive wealth management capability is further elevated.
For the money market fund sector, a long-standing sales practice is exiting the stage. For small and medium-sized banks, however, the real test may have only just begun.
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