On 12 April 2016, the Presidency of the Council of the EU published a compromise proposal for the Regulation on Money Market Funds (MMF Regulation, the first draft of which was discussed in our May 2015 In Focus paper. 

Early indications are that promoters will be able to work with the latest proposal. Headline changes include; 

  • The removal of the sunset clause for Low Volatility Net Asset Value MMFs (LVNAV MMFs) (whereby the authorisation of LVNAV MMFs would lapse), with a review to follow in 5 years with no presumption of termination (ESRB and ESMA will be involved in the review).
  • The extension of the transitional period to two years (from the date the MMF Regulation comes into force). Thereafter, Constant Net Asset Value MMFs (CNAV MMFs) will need to operate as CNAV MMFs that invest in public debt instruments (Public Debt CNAV MMFs) or LVNAVMMFs or Variable Net Asset Value MMFs (VNAV MMFs).
  • The ability of Public Debt CNAV MMFs to invest in non-EU public debt.