Treasury Today features the brief, "MMF regulations: raising investor expectations," which briefly reviews European money funds post-reform. Aviva Investors' Caroline Hedges writes, "When money market fund (MMF) reform came into force for US and European markets (2016 and 2019 respectively), it was part of the ongoing response to the global financial crisis of 2007/08. In keeping with the perceived general need for systemic stability in financial services, banks have undergone a huge regulatory overhaul, notably around capitalisation. This is intended to help them withstand the worst effects of another crisis. It was natural that the reformers would focus next on the so-called 'shadow-banking' sector, of which money markets are a systemically important component. The reform of money markets was lobbied for by key participants, including Aviva Investors. We had already changed our CNAV fund to VNAV (variable net asset value) in 2008, believing that CNAV was no longer a suitable model for our clients. Indeed, with assets fluctuating in value -- floating rate notes were especially volatile during the financial crisis -- the risk of realised losses (or even defaults) was real. Action was required. The efficacy of the regulatory response is yet to be tested by market failure. However, a key element -- the low volatility net asset value (LVNAV) fund, which saw Aviva Investors become the earliest adopter amongst established funds -- incorporates a mechanism ensuring such funds remain open in times of extreme stress." She adds, "With Aviva Investors, and other fund managers, committed to integrating environmental, social and governance (ESG) themes into our funds, there is a clear commitment to helping clients who may lack the resources to screen investments in this space too. MMF regulations have come at a time when the financial sector needs more clarity and security. The market has responded positively, helping to build investor confidence in what was, frankly, already a robust proposition."

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