The July issue of our flagship Money Fund Intelligence will feature an interview with Institutional Money Market Funds Association spokesman Nathan Douglas, discussing a new initiative by the London-based trade association for providers of triple-A rated money market funds to lobby for U.S. style regulations for money funds in Europe. The most recent issue of U.K.-based Treasury website GT News also features an article, "Money Market Funds: Navigating a Course Through the Market Storm" that reviews several presentations from the recent London conference, "Money Fund Forum Europe 2008". It appears momentum for a European Rule 2a-7 is building.

IMMFA Chairman Donald Aiken and a number of others have begun calling for a "pan-European definition of MMFs," changing IMMFA's prior stance of lobbying for a separate "Liquidity" fund designation for U.S.-style money market funds. Europe currently has no regulations defining the term "money market fund", and previous efforts to standardize encountered resistance from more liberal investment policy "money funds" such as those in France. But the French "Tresorerie Dynamique" funds have seen assets decline by over half over the past year, and other cash-like and enhanced cash funds have experienced problems, making "true" money fund providers painfully aware of the need to differentiate themselves.

The GT News' article says, "Despite the positive aspects of MMFs, there are, of course, still lessons to be learned from the market crisis. One of the main lessons that came through in almost all of the sessions at the Forum was the need for clear industry definitions on what can be called a MMF. As IMMFA's Aiken pointed out, not all cash fund structures are the same and some funds, for example in the enhanced cash area, have been hit hard in the market turmoil due to their portfolio mix. A strong definition, particularly in Europe, would help boost investor confidence."

GT News also cited comments from Kathryn Kerle of Moody's, saying, "Kerle stated that the money markets are starting to recover from the events of the last 12 months, but the crisis is not yet over. MMFs have performed well so far, thanks to widespread financial support from parents, continued investor confidence and changed investment strategies on the part of management firms. The same, however, can not be said for enhanced cash funds, which have suffered badly from the liquidity crisis."

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