The FT writes "EU nears deal on regulating money market funds." It says, "EU governments have taken a major step towards ending one of the most politically rancorous debates on financial regulation in recent years as they brokered a deal on rules for money-market funds.... According to diplomats, a deal was wrapped up this week by officials from national financial ministries, and will be confirmed by finance ministers on June 17. This will then clear the way for negotiations with the European Parliament on the final version of the law. The thrust of the compromise brokered by the Netherlands, which holds the EU's rotating presidency, is that certain types of funds will be allowed to continue operating with a fixed-share price." See too William Fry's commentary, "Money Market Funds Regulation: Fifth Compromise Proposal Published." Author Niall Crowley writes, "On 10 May 2016, the Dutch presidency of the Council of the EU published a fifth compromise text on the proposed Regulation on Money Market Funds (MMF Regulation). This latest compromise proposal sets out a number of amendments to the fourth proposal, the more material of which are set out below: Constant Net Asset Value (CNAV) Money Market Funds (MMFs) will only be permitted to operate in the EU as either a CNAV MMF that invests in public debt instruments, or as a Low Volatility Net Asset Value MMF (LVNAV MMF).... A CNAV MMF, a LVNAV MMF and a Variable Net Asset Value (VNAV) MMF may all take the form of a short-term MMF. Only a VNAV MMF may take the form of a standard MMF.... The extension of the transitional period from one to two years following the entry into force of the MMF Regulation, as recommended in the fourth compromise proposal, has been retained. This means that existing CNAV MMFs will have two years to convert to either CNAV MMFs that invest in public debt instruments, LVNAV MMFs or VNAV MMFs." For more on the latest EU proposal, which some believe will pushed forward later this summer, see our May 10 Link of the Day, "Reuters on EU Reform Compromise."
