Money Market Funds (MMFs)
Money market fund reform has been firmly on the EU’s agenda since the European Commission released its proposal for an MMF Regulation in September 2013. The MMF Regulation has its origins in recommendations made by the Financial Stability Board (FSB) and the European Systemic Risk Board (ESRB).
Key Areas of the MMF Regulation
Key areas covered by the MMF Regulation include:
- Requirements relating to constant net asset value (CNAV) MMFs which maintain a stable share price, e.g. €1 or $1 per share
- A prohibition on sponsor support
- Valuations and the use of amortised cost accounting
- Eligible assets
- Investment in securitisations and Asset Backed Commercial Paper (ABCP)
- Credit assessment procedures and external ratings
- Risk management
- Disclosure and transparency
European Parliament Report
On 29 April 2015 the European Parliament voted to adopt a report on MMFs which proposes to remove the imposition of a 3% capital buffer for CNAV MMFs and to provide for three new types of MMF as an alternative to existing CNAV MMFs:
- A Low Volatility Net Asset Value Money Market Fund (LVNAV MMF)
- A Retail CNAV MMF
- A Public Debt CNAV MMF
Next Steps for MMF Regulation
The Council of Ministers will next agree its position before inter-institutional negotiations on the final text of the Regulation will commence.
Irish Funds will continue to engage constructively to ensure that the MMF Regulation provides for MMF products which adequately meet the needs of existing CNAV investors as well as the financing needs of the EU economy, while at the same time addressing the policy objectives of ensuring a robust regulatory framework for money market funds.
In the publications, news and other content on this page you can keep up to date with relevant MMF developments and the work of the Association in this area.