U.K.-based Treasury Today writes "MMFs: what's next after CNAV?" The perhaps premature piece says, "This week Europe's stable NAV money market funds received a temporary stay of execution after the planned European Parliament vote on new regulatory proposals was postponed. Industry stakeholders say a mass exodus from MMFs could ensue if the legislature votes to adopt the proposals as currently drafted. But where will all that liquidity go? In this Insight, we take a look at the alternatives." The article explains, "Earlier this week, European lawmakers delayed a vote on proposals to regulate money market funds (MMFs), after splits began to appear within the European Parliament's economic affairs committee on the best way to proceed. The decision means that industry stakeholders now have an extra two weeks to voice their concerns on the proposals before MEPs cast their votes. Enough has already been written on the reasons why certain aspects of Europe's MMF regulatory proposals are so misguided that there is no need to run through it all again here. But there is one remaining area that has not yet been sufficiently explored that perhaps deserves some attention now, given the impending vote at the European Parliament. The issue is: what will happen if the regulation is indeed approved as it has been drafted? What alternatives are there to MMFs for corporate investors if a switch to VNAV is not feasible? A recent survey by Treasury Strategies, which was included in an open letter sent to the European Parliament ahead of this week's vote, offers a hint. In Europe, 61% of corporate treasurers invest cash in CNAV funds only, while 30% use a combination of CNAV and VNAV. If all funds are compelled to switch to VNAV, the survey indicates that 69% of CNAV fund investors will reduce or discontinue using MMFs. According to this survey, bank deposits represent the preferred alternative for a majority (72%) of CNAV MMFs users."

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