Saturday, 6 February 2010

European Money Market Funds: Definition in the Heart of Darkness

The 41th Session of the Philosophical Foundations of Law and Finance on Friday, February 12th will focus on the evolution of money market funds and their significance to the normal functioning of global capital markets. MMFs have been around for more than 35 years representing about 1/3 of assets under management of collective investment schemes, or mutual funds in the U.S. language, and yet, remained largely unknown to the general public. Not until September 2008, when a run on the third world-largest MMF triggered a global liquidity squeeze resulting in the Great Recession.

We will take a bird-view of the money market fund landscape on the both sides of the Ocean. A symbolic reading of the title contrasts between light and dark, portfolio transparency and a lack of information. Comparisons will be also made between MMF regulation in the U.S. and conflicting views on what constitutes a money market fund among European regulators.

We will review MMF definitions that are currently in effect along with various MMF industry proposals, including those put forward by the SEC in the U.S. and IMMFA, EFAMA, and CESR in Europe. There is a high level of cooperation amongst all interested parties in supporting the primary goal of establishing a common definition of European MMFs. Will the regulators arrive to a solution equally workable for investors and the industry is remained to be seen.

The CESR Consultation Paper “A common definition of European money market funds” is available at


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