U.K. publication Treasury Today writes, "Whither go European money market funds?" The article says, "In a move to address financial systemic instability, on 4th September the European Commission (EC) put forward a number of proposals to regulate the European money market fund (MMF) industry, in a similar way that Basel III's Liquidity Coverage Ratio (LCR) has put constraints on banks to ensure that they adequately manage their liquidity. The proposed regulation, which will apply to all MMFs domiciled, managed or marketed in the EU, affecting nearly E1 trillion in investor assets, requires: Certain levels of daily/weekly liquidity in order for the MMF to be able to satisfy investor redemptions -- MMFs are obliged to hold at least 10% of their assets in instruments that mature on a daily basis and an additional 20% of assets that mature within a week. Clear labelling on whether the fund is short-term MMF or a standard one (short-term MMFs hold assets with a residual maturity not exceeding 397 days while the corresponding maturity limit for standard MMFs is two years). A capital cushion (the 3% buffer) for constant net asset value (CNAV) funds that can be activated to support stable redemptions in times of decreasing value of the MMFs' investment assets. Customer profiling policies to help anticipate large redemptions. Some internal credit risk assessment by the MMF manager to avoid overreliance on external ratings.... As the proposals start moving through the political process, there is still time to influence the decision-makers. The IMMFA is working together with the Association of Corporate Treasurers (ACT) to ensure that the corporate voice is heard. Each member of the association will also be reaching out to its investors to get involved in the debate. [IMMFA's Susan] Hindle Barone recommends pointing out directly to local MEPs, as well as representatives from the Bank of England (BoE) and the Treasury how damaging these proposals could be. "We are encouraging anyone who cares about this to make their voices heard, whichever avenue that takes," she says. "We are trying to explain that this has a real impact on the broader economy and we struggle to get that message through."" (Note: Crane Data will be hosting its first European Money Fund Symposium Sept. 24-25, 2013, in Dublin. Treasury Today is a media partner of the event.)
