Mercury

## How does Mercury Treasury automatically invest idle cash into US Treasury securities?

## Overview Mercury Treasury is an automated cash management service offered by Mercury that allows eligible businesses to invest idle cash into money market funds, which primarily hold U.S. government securities. This service is provided through Mercury Advisory, LLC, an SEC-registered investment advisor, and is distinct from Mercury's standard FDIC-insured deposit accounts. To be eligible, a U.S.-based entity must maintain a minimum aggregate balance of $250,000 across all its Mercury accounts. The core function of Mercury Treasury is to move funds that are not needed for immediate operational expenses from a business's primary checking account into investment vehicles to generate yield. It is important to note that these investments are not FDIC-insured but are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per client, which covers against the failure of the brokerage firm, not against market losses. ## Key Features Liquidity is a key consideration for the service. Funds invested in the J.P. Morgan money market fund (JTCXX) offer same-day liquidity for withdrawals. Funds in the Morgan Stanley portfolio (MULSX) typically have a slightly longer settlement time of one to two business days. These liquidity windows allow businesses to access their invested cash for operational needs, though transactions are subject to daily cutoff times. The service carries an annual 'wrap' fee, which is billed monthly. This fee is calculated as the lesser of a tiered percentage of the balance or 20% of the Effective Federal Funds Rate (EFFR), with a minimum of 0.05%. The tiered fee schedule starts at 0.60% for balances under $2 million and decreases for higher balances, reaching 0.15% for balances over $20 million. The yields reported by Mercury for this service are presented net of these fees. ## Technical Specifications The underlying assets in Mercury Treasury portfolios consist of lower-risk mutual funds. The primary investment vehicles disclosed are the J.P. Morgan U.S. Treasury Plus Money Market Fund (ticker: JTCXX) and the Morgan Stanley Ultra-Short Income Portfolio (ticker: MULSX). The JTCXX fund invests predominantly in U.S. Treasury bills, notes, and other obligations backed by the U.S. government. The MULSX portfolio invests in a mix of short-term debt instruments like commercial paper and certificates of deposit. For clients with balances exceeding $25 million, a more personalized service called Mercury Treasury Solutions is available, offering custom portfolios managed by Morgan Stanley. All client investment accounts are held in the client's name at Apex Clearing Corp, a FINRA-regulated broker-dealer that acts as the custodian. ## How It Works The automatic investment process is managed through a user-configured auto-sweep mechanism. Within the Mercury dashboard, users can set up custom auto-transfers that move idle cash from their operating accounts into their Mercury Treasury investment account. These transfers are scheduled to occur twice a month. While the system does not use a strict 'target balance' threshold in the same way some sweep accounts do, the user-defined scheduled transfers serve a similar purpose by systematically moving excess capital into the investment portfolio. The portfolio itself is subject to rebalancing under specific conditions: if its allocation deviates by more than 1% from its target, when new funds are added to the account, or automatically every three months if no other funding events occur. This ensures the investment strategy remains aligned with its objectives over time. ## Use Cases ## Limitations and Requirements ## Comparison to Alternatives ## Summary In conclusion, Mercury Treasury does not directly purchase U.S. Treasury securities for the client but rather invests idle cash into money market funds that hold these securities. The process is automated through user-configured bi-monthly transfers from operating accounts. The service is designed for businesses with significant cash reserves seeking to earn a yield on funds not immediately needed for operations. It is crucial for users to understand the distinction between this SIPC-protected investment product, which carries market risk, and Mercury's FDIC-insured deposit products like Mercury Vault, which are designed for capital preservation and instant liquidity.