liquidity fees

European Parliament Votes to Adopt ECON Report on MMF Regulation

On April 29, 2015, the European Parliament adopted a report by its Committee on Economic and Monetary Affairs (ECON) containing amendments to the European Commission’s proposed Regulations on Money Market Funds (MMF Regulation). The ECON  report proposes:

  • limiting constant net asset value (CNAV) MMFs to two types (retail CNAV MMFs and public debt CNAV MMFs);
  • introducing low volatility net asset value MMFs, requiring MMFs to divest their asset portfolios and have in place sound stress-testing processes;
  • preventing MMFs from receiving external support from third parties, including their sponsors;
  • requiring MMFs to report certain information to their investors on a weekly basis; and
  • requiring public debt and retail CNAV MMFs and low volatility net asset value MMFs to apply “liquidity fees” and “redemption gates” to help stem sudden outflows.