In Friday's "Link of the Day, we quoted Reuters on a leaked draft of proposed EU buffer requirements on European money funds. It appears Bloomberg has a different spin on the story, writing late Friday night, "Money Market Funds Set to Win Delay of EU Reserve Rules." The article says, "Money-market funds may win more time to comply with planned European Union rules requiring them to hoard cash reserves, a person familiar with the talks said. The European Commission is considering whether to extend a draft timetable for funds that maintain a fixed share price to build up a cash "buffer" equivalent to 3 percent of their assets, on concerns that a short deadline could harm businesses' access to finance, said the person, who asked not to be named because the negotiations are private. An early draft of the plans, seen by Bloomberg News, would have required funds to comply with the measure six months after the final version of the law is published, following agreement by legislators. Under a revised version being considered by the commission, that may increase to as long as three years, the person said.... Funds with fixed share prices have come in for particular attention from regulators, as they give "an impression of safety even though MMFs are subject to credit, interest rate and liquidity risk," the International Organization of Securities Commissions said last year. The failure of one fund to honor this commitment can put pressure on others, and "trigger a run" that destabilizes the financial system, IOSCO said. The commission's proposals, once they are published, will need approval by governments and by the European Parliament before they can become law."
