Posted on 22 October 2009
This paper, entitled “A common definition of European money market funds” sets out CESR’s proposals for a common definition, the main aim of which is improved investor protection.
CESR proposes a two-tiered approach to the definition: (i) short-term money market funds; and (ii) longer-term money market funds.
The definitions will apply to harmonised (UCITS) European money market funds and CESR recommends that the same approach is followed at national level for non-UCITS money market funds that are authorised by Member States.
In both cases specific disclosures would be required to draw attention to the difference between the money market fund and investment in a bank deposit. Longer-term money market funds would be required to provide enough information to clarify the impact of the longer duration on the risk profile.
The definition of money market funds will take the form of Level 3 Guidelines. Existing European money market funds will have a transitional period of 12 months after the introduction of the guidelines to comply with the criteria set out in the agreed definition.
Deadline for comments is 31 December 2009.
Related Link: CESR consultation paper
