The Irish Funds Industry Association (IFIA) has responded to the European Parliament’s (EP) decision on Wednesday to vote through an ECON report on Money Market Fund Regulation (MMFR).
The plenary vote moves MMFR another step towards completion, and while the IFIA welcomes the rejection of a capital buffer in the EP report, the trade body does not believe that the other product options as currently structured in the report meet the needs of investors who use MMFs and the managers who provide products.
The IFIA believes that the EU’s commitment to the creation of Capital Markets Union (CMU) can only succeed with a functioning and effective MMF sector and the current proposals add unnecessary risks to the achievement of this goal.
Commenting on the decision, Pat Lardner, Chief Executive of the IFIA, says: “As currently drafted, we do not believe the proposals deliver an alternative which will adequately meet the needs of existing CNAV investors. Additionally, there is a significant risk that the solutions outlined in the current proposal will undermine and potentially destabilise the move to a CMU in Europe. Efficient capital markets rely on exactly the type of liquidity which MMFs provide to fund public and private sector entities across the EU and beyond.
“As the decision-making process moves to the Council of Ministers and trilogue negotiations, the IFIA will continue to engage with all relevant parties and advocate to reach an outcome that meets the needs of European investors and the financing requirements of the real economy, while at the same time addressing the policy objectives of ensuring a robust regulatory framework for money market funds. There is significant work left to be done.”