Q: In the last couple of days there has been a few references on BNN to some regulatory changes that will have the effect of reducing the rates paid on HISAs at banks, etc. Can you pls explain exactly what is happening and how much effect there will be from this? Last, are there reasonable alternatives (ie secure with good rates) available if the rates go down in any significant way? Thanks for your excellent service
5i Research Answer:
This article will provide all the information needed. Essentially, regulators were worried that a massive sell off of these ETFs would result in liquidity issues for banks, so they have adjusted the reserve requirements to address this. We only expect a small decline in yields because of this, and believe much of this is already reflected in market pricing. We would thus remain confident in these products for cash parking purposes.