The Irish Fund Industry Association (IFIA) has rejected the European Union’s latest money market fund proposal and asked it to implement a consistent global response to money market funds reform.
Ireland’s funds industry could face increased scrutiny under new proposals unveiled by the European Commission, which aims to increase the regulation of the so-called shadow banking industry.
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The value of Irish-domiciled money market funds at the end of 2012 was approximately 295 billion, representing about a quarter of total Irish-domiciled assets.
According to the statistics, released by the European Fund and Asset Management Association (Efama), around 1 trillion is invested in money market funds within the EU, representing around 15% of total Ucits assets.
These assets are focused in three countries France, Ireland and Luxembourg accounting for 90% of all money market fund assets at the end of 2012.
Efama has reported that Ucits funds saw net inflows of 12 billion in the second quarter, down from the record net inflows of 132 billion recorded in the first quarter of the year.
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By GlobalDataThe EU has proposed a 3% capital net asset value buffer for all constant net asset value money market funds that would act as a capital cushion.
Kevin Murphy, chairman of the IFIA, said: "If regulators are concerned that certain types of money market funds present a systemic risk to the global financial markets then clearly a global response is required to address such a risk.
"It follows therefore that imposing different rules in the EU to the rules in the US on the same fund product will not address that global systemic risk. Every effort should be made to ensure that consistent and effective rules are introduced. Having different rules for money market funds in the US and the EU is neither consistent nor effective. The EU proposal for a 3% capital buffer must be reconsidered on that basis," Murphy added.
On 5 Septmber 2013, PBI reported that the European Commission has proposed new rules for money market funds (MMFs) to develop a more stable financial system by clamping down on shadow banking.
