PwC's Managing upstream risk: Regulatory reform review - An asian perspective December 2013 | Page 33

4. Asset Management
4.1 Money Market Funds

Update

Members of ECON came out largely against
rapporteur Saïd El Khadraoui’s (S&D, Belgium)
proposal to not only force some MMFs to
have a capital reserve, but to phase them out
completely within five years. El Khadraoui
confirmed on 2 December 2013, the hotly
contested suggestion that will force constant
net asset value (CNAV) funds, from late 2014,
to hold a 3 per cent capital reserve buffer. These
funds will be converted into (VNAV) MMF five
years after the entry into force of this capital
reserve regulation. ECON members asked where
this money will go and also emphasised the
importance of MMFs, and in particular CNAV
funds, to the financing of the real economy in
terms of short-term liquidity. This proposal for a
regulation on MMFs comes as part of the drive
to better regulate the shadow banking sector,
which can be defined as non-bank financial
intermediation. According to the FSB, the
sector’s assets grew in 2012 to reach US$71
trillion globally.

Asset Management | Regulatory Reform Review

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