Institutional prime money market funds are drying up since SEC rules took effect in October, according to a corporate treasurers trade group.

About $1 trillion has fled the funds, leaving $376 billion, since the funds were required to have floating share prices (instead of the traditional $1), liquidity fees and redemption gates, NACT Chair Thomas Deas Jr., chair of the National Association of Corporate Treasurers, says in prepared testimony for the Senate Banking Committee.

In the run-up to the SEC rules, the number of institutional prime funds shrank in four years by about one-third, to around 400.

Retail investors cannot buy these funds. However, such investors are indirectly exposed to fluctuations in the prices of the institutional funds by their holdings in traditional mutual funds and their pension funds, which can invest in these vehicles.

Deas indicated many corporate treasures may be fleeing institutional prime money market mutual funds and going into government funds because they may not be able to get the considerable help they would need from their IT departments to keep track of gains and losses when they buy institutional shares at one price and sell them at another in routine redemptions.

“However, prime funds are important to treasurers not only as a flexible alternative for investments of temporary excess cash balances, but also as providers of short‐term funding,” said Deas.

The new SEC rules came in an effort to strengthen control over the investments after the Primary Fund of the Reserve Group of mutual funds “broke the buck” and reported a net asset value per share of under one dollar.