In late July, ESMA published its response to the European Commission's Green Paper on Shadow Banking (which could have a significant impact on some funds). ESMA agrees with the need for stricter monitoring of the shadow banking system and considers that , for monitoring purposes, it is crucial to have a flexible and evolving framework that would allow the inclusion of financial innovations as long as their features and the risks attached to them are consistent with the definition of the shadow banking system. ESMA also considers that it would be inappropriate to focus unduly on exchange traded funds (ETFs) rather than shadow banking activities per se.

ESMA points to its work on AIFMD, UCITS, EPM, MMFs, ETFs and collateral and points out that new provisions should complement existing regimes so to achieve a harmonised approach.

In August 2012, the European Parliament's Committee on Economic Affairs (ECON) published a draft report on shadow banking. The draft report contains a draft European Parliament legislative resolution on shadow banking. The draft legislative resolution invites the European Commission to submit a legislative proposal for the creation by the European Central Bank (ECB) of a central EU database for euro repo transactions by the end of 2013. The report suggests proposals which include asset valuation and capital requirements of MMFs and addressing risks of ETFs.

The International Organization of Securities Commissions (IOSCO) is continuing its work on the basis of the mandate given to it by the G20 Heads of State and the FSB, to develop policy recommendations for strengthening oversight and regulation of the shadow banking system, including Money Market Funds. IOSCO Committee 5 on Investment Management will meet at the end of August to consider feedback and to elaborate draft final recommendations for addressing regulatory reforms to mitigate MMF’s susceptibility to runs and other systemic risks. The IOSCO Board will determine IOSCO’s further course of action at its meeting in Madrid on 3/4 October, and will report to the G20 Finance Ministers meeting in November.