The Economic and Monetary Affairs Council of the EU has approved the General Approach reached on Money Market Fund Reform (MMFR) at Council Working Party level. This General Approach followed an original proposal by the European Commission in September 2013.
The European Fund and Asset Management Association (EFAMA) is of the view that a well-functioning European market for MMFs has an important part to play in the European Commission’s flagship Capital Markets Union initiative. EFAMA, whose members manage both VNAV and CNAV funds, has from the outset indicated that a proportionate and balanced Regulation which ensures the viability of both CNAV and VNAV MMFs, can contribute to supporting alternative sources of financing to the real economy and financing European growth.
We believe the agreement reached under the Netherlands Presidency, taking into account market realities, to be an improvement on crucial matters. We are nonetheless conscious that the magnitude of the MMF reform will require a major overhaul of the industry. We also believe that further work is necessary during the Trilogue discussions to safeguard current achievements but also to further ensure that the rules work in practice and secure the viability of all MMFs.
Peter De Proft (pictured), Director General of EFAMA, says: “Ultimately, EFAMA believes the final agreement should find the right balance between financial stability and economic growth. Ensuring the viability of MMFs as an alternative source of short-term financing with a crucial role to play in our capital markets is all the more important considering the unprecedented economic, political and societal challenges faced by the European Union today”.