A measure of securities turnover in U.S. prime money market funds sank to a level not seen in at least 25 years, a tracking firm said on Wednesday, as clients yank out cash and managers prepare for new regulations coming in October.

The so-called "weighted average maturity" of securities held in prime funds aimed at institutional investors stood at 16 days as of Aug. 9, said iMoneyNet, the lowest since at least 1991. The figure was 17 days in the prior week and 34 days as recently as March.

The drop reflects portfolio managers making their funds more liquid to cope with customer outflows ahead of new regulations from the U.S. Securities and Exchange Commission.

"They're holding more and more overnight securities to cover redemptions to make sure they're not having any problems," said Mike Krasner, iMoneyNet managing editor.

The latest SEC rules aim to make the prime funds safer after the category ran into trouble during the financial crisis, such as by allowing them to let their net asset values vary from the traditional $1 per share.

A side effect has been to drive assets into government money funds that face fewer changes. Prime institutional money funds held $638.6 billion as of Aug. 9, iMoneyNet said, down 31 percent from the start of the year, while government institutional funds held $1.14 trillion at Aug 9, up 30 percent over the same period, the firm said.

Dave Fishman, who oversees Goldman Sachs Group money funds, said big clients will keep shifting assets to avoid the floating valuations or new powers prime funds will have to restrict withdrawals in times of stress.

"I think there is still a lot more money to be moved," he said.

Tracy Hopkins, chief operating officer of cash investment strategies for the Dreyfus unit of BNY Mellon Corp, said she had expected large customers to have moved more money by now. But some have remained in prime funds because they continue to pay a higher yield than government funds.

The yield spread stood at 13 basis points as of Aug. 9, iMoneyNet said, down from 17 basis points in May. Some had forecast the spread to widen further but even the current figure is enough to keep some clients in prime funds, at least for now.

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