This past weekend, the Financial Times wrote about delays in passing European money market fund reforms in the article, "Luxembourg 'blocking' money market reform." Luxembourg, a major European money fund domicile, currently has the EU parliament Presidency, and reforms have been stalled for months over onerous proposals similar to ones rejected by the U.S. S.E.C. in 2014. (See our Sept. 23 News, "European Money Fund Symposium: Kooy, Lardner Push Viable Solutions.") Year-to-date through 11/30, European money fund assets (365 funds) are down $59.4 billion, or 7.9%, to $695.3 billion combined USD, Euro and Sterling assets), according to our Money Fund Intelligence International, though assets are up in the latest month and quarter. We review the latest on European money fund reforms, assets and yields, and recap our latest MFI International Money Fund Portfolio Holdings report below.

The FT article says, "Luxembourg has been accused of blocking the reform of Europe's $700bn money market fund industry, with critics claiming the country is putting its own interests first. Luxembourg took over the EU presidency in July, but little progress has since been made on reforming money market funds, which are used by companies and investors to park cash. The reforms are being proposed to avoid investor runs in a crisis, but industry figures say the changes would be detrimental to Luxembourg's money market fund sector."

The piece quotes Eva Joly, an MEP and spokesperson for the Green party, "The Luxembourgish presidency seems to be blocking the [money market fund] reform. Luxembourg does not want to move forward." The article continues, "Luxembourg, Ireland and the UK are home to the majority of Europe's so-called constant NAV funds, a type of money market fund that has a fixed share cost. These funds are set to be most affected by the planned changes."

They also quote Moody's analyst Marina Cremonese, "[Luxembourg is] not a neutral party [when it comes to money fund reform]." The article alleges, "It is understood Luxembourg, with support of some other member states, is arguing for watered-down reforms. A spokesperson for the grand duchy's presidency said: "Luxembourg is certainly not blocking the reform, but is actively working with the other member states to find a solution."

Finally, the FT piece adds, "Sources say Luxembourg wants the sunset clause [on a compromise LVNAV option] removed, which would lead to a clash with other countries on the European Council, the body made up of the 28 EU member states. A spokesperson for the European Council said there is little sign the current deadlock between member states around money market fund reforms will be broken. "Very little progress has been made in recent months. It will be for the incoming Netherlands presidency to decide what the next move should be," he added. A spokesperson for the Dutch presidency, which takes over from Luxembourg in January, said money market funds are not among its priorities for its time in charge."

Assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Dublin or Luxemburg and denominated in USD, Euro and GBP (sterling), were up slightly in November, increasing by $3.6 billion to $695.3 billion through 11/30/15. U.S. Dollar (USD) funds (157) tracked by Crane Data's Money Fund Intelligence International account for over half ($388.9 billion, or 55.9%) of the total, while Euro (EUR) money funds (98) total E73.1 billion and Pound Sterling (GBP) funds (110) total L148.2. USD funds were up $13.3 billion, or 3.5%, in November and $5.2 billion, or 1.4%, YTD through 11/30. Euro funds are down E3.7 billion, or 4.8%, for the month and E17.6 billion, or 19.4%, YTD, while GBP funds are down L3.6 billion in November, or 2.4%, and down L4.2 billion, or 2.8%, for the year through 11/30. Yields of offshore funds vary depending on the currency. Offshore USD MMFs yielded 0.08% (7-Day) and 0.06% (30-Day) as of November 30, while `EUR MMFs yielded -0.14% for 7-Day, and GBP MMFs yielded 0.38% for both 7-Day and 30-Day.

The USD funds tracked by MFI International contain, on average (as of 10/31/15), 21.0% in Certificates of Deposit (CDs), 27.0% in Commercial Paper (CP), 20.0% in Treasury securities, 14.0% in Other securities (primarily Time Deposits), 13.0% in Repurchase Agreements (Repo), 3.0% in Government Agency securities, and 2.0% in VRDNs (Variable-Rate Demand Notes). USD funds have on average 28.7% of their portfolios maturing Overnight, 9.2% maturing in 2-7 Days, 17.4% maturing in 8-30 Days, 8.9% maturing in 31-60 Days, 15.4% maturing in 61-90 Days, 16.7% maturing in 91-180 Days, and 3.6% maturing beyond 181 Days. USD holdings are affiliated with the following countries: US (33.2%), France (16.0%), Japan (9.3%), Canada (8.0%), Sweden (6.8%), Great Britain (4.7%), Australia (4.6%), Germany (4.6%), Netherlands (2.5%), and Switzerland (2.4%).

The 20 Largest Issuers to "offshore" USD money funds include: the US Treasury with $87.4 billion (20.1% of total portfolio assets), Credit Agricole with $19.7B (4.5%), BNP Paribas with $13.7B (3.1%), Bank of Tokyo-Mitsubishi UFJ Ltd with $11.8B (2.7%), Natixis with $11.1B (2.5%), DnB NOR Bank ASA with $10.4B (2.4%), Bank of Nova Scotia with $9.7B (2.2%), Societe Generale with $9.7B (2.2%), Svenska Handelsbanken with $9.0B (2.1%), the Federal Reserve Bank of New York with $8.9B (2.0%), JP Morgan with $8.7B (2.0%), Wells Fargo with $8.5B (1.9%), Skandinaviska Enskilda Banken AB (SEB) with $8.3B (1.9%), Sumitomo Mitsui Banking Co with $7.9B (1.8%), Credit Mutuel $7.4B (1.7%), Rabobank with $7.2B (1.7%), Nordea Bank with $7.1B (1.6%), RBC with $6.9B (1.6%), Norinchukin Bank with $6.7B (1.5%), and HSBC with $6.4B (1.5%).

The EUR funds tracked by Crane Data contain, on average 24.0% in CDs, 43.0% in CP, 18.0% in Other (primarily Time Deposits), 10.0% in Repo, 1.0% in Agency securities, and 4.0% in Treasury securities. Euro funds have on average 22.0% of their portfolios maturing Overnight, 5.1% maturing in 2-7 Days, 17.2% maturing in 8-30 Days, 15.9% maturing in 31-60 Days, 17.3% maturing in 61-90 Days, 19.0% maturing in 91-180 Days, and 3.3% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (31.1%), US (13.3%), Japan (10.2%), Sweden (8.2%), Great Britain (7.8%), Germany (7.2%), Netherlands (6.7%), Belgium (4.1%), and Switzerland (1.7%), and Canada (1.2%).

The 15 Largest Issuers to "offshore" EUR money funds include: BNP Paribas with E4.7B (6.3%), Republic of France with E3.9B (5.2%), Credit Agricole with E3.3B (4.4%), Societe Generale with E3.0B (4.1%), Nordea Bank with E3.0B (4.1%), Proctor & Gamble with E3.0B (4.0%), Rabobank with E3.0B (4.0%), HSBC with E2.9B (3.9%), Svenska Handelsbanken with E2.8B (3.7%), Sumitomo Matsui Banking Co. with E2.1B (2.8%), BRED Banque Populaire SA with E2.0B (2.6%), Credit Suisse with E1.9B (2.6%), Bank of Tokyo-Mitsubishi UFJ Ltd with E1.9B (2.6%), Standard Chartered Bank with E1.9B (2.5%), and `JP Morgan with E1.7B (2.3%).

The GBP funds tracked by MFI International contain, on average (as of 10/31/15) 26.0% in CP, 33.0% in Other (Time Deposits), 29.0% in CDs, 5.0% in Repo, 5.0% in Treasury, 1.0% in Agency, and 1.0% in VRDNs. Sterling funds have on average 21.2% of their portfolios maturing Overnight, 7.4% maturing in 2-7 Days, 14.4% maturing in 8-30 Days, 16.1% maturing in 31-60 Days, 16.8% maturing in 61-90 Days, 18.0% maturing in 91-180 Days, and 6.1% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (16.1%), Great Britain (12.9%), Japan (12.3%), Germany (11.0%), US (7.4%), Netherlands (7.2%), Australia (6.1%), Canada (6.0%), Sweden (4.6%), and Switzerland (3.6%).

The 15 Largest Issuers to "offshore" GBP money funds include: Bank of Tokyo-Mitsubishi UFJ Ltd with L4.6B (3.6%), UK Treasury with L4.6B (3.6%), FMS Wertmanagement with L4.5B (3.6%), Sumitomo Mitsui Banking Co with L4.4B (3.5%), BNP Paribas with L4.2B (3.4%), Credit Agricole with L3.7B (2.9%), Rabobank with L3.6B (2.8%), Lloyds TSB Bank PLC with L3.3B (2.6%), Standard Chartered Bank with L3.3B (2.6%), BRED Bank Populaire SA with L3.2B (2.6%), HSBC with L3.2B (2.5%), ING Bank with L3.0B (2.4%), Mizuho Corporate Bank Ltd with L2.9B (2.3%), Australia & New Zealand Banking Group Ltd. with L2.8B (2.2%) and Bank of America with L2.8B (2.8%). (E-mail us at to request a copy of our latest MFI International or MFII Portfolio Holdings.)

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