The Financial Times writes "Brussels tightens noose on money funds". The article says, "The European Commission is set to push ahead with a series of controversial reforms that will effectively "kill off" the continent's E450bn fixed value money market fund industry. A draft law expected to be unveiled by Brussels on Wednesday will call for so-called "constant net asset value (CNAV)" funds to be forced to hold a 3 per cent cash buffer to help avert a repeat of the "runs" some funds suffered during the financial crisis. With fees for such funds -- which invest in high-quality, short-term money market instruments and trade at a fixed Eor $1 a share except in extremis -- as low as 8-10 basis points, industry figures said the proposal was uneconomic, even with a lengthy phase-in period. The Commission estimates the 3 per cent buffer would raise fees from 21bp to 30bp but help insulate investors from losses." The FT quotes Susan Hindle Barone, secretary-general of the Institutional Money Market Funds Association, "This would be a de facto abolition of CNAV funds. A requirement to hold 3 per cent is simply uneconomic. We expect that most CNAV providers will convert their funds to variable NAV." The piece adds, "."

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