A Hat That Fits on Different Heads? The Proposed Regulation on Money Market Funds and the System of EU Investment Law

Rehahn Johannes
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Rehahn Johannes: LL.M. (London School of Economics), LL.M.oec. (Martin Luther University Halle-Wittenberg); Associate, Linklaters LLP, Frankfurt (Main).United Kingdom of Great Britain and Northern Ireland

European Company and Financial Law Review, 2016, vol. 13, issue 3, 517-545

Abstract: Money Market Funds are an attractive form of investment and important providers of liquidity to various economic actors but proved to be vulnerable to investor runs, thereby posing serious risks to the financial system as a whole. In the framework of the discussion on “shadow banking”, the Financial Stability Board and the International Organization of Securities Commissions acknowledged the need for tighter regulation of Money Market Funds and made proposals for legislative measures whose transposition in EU Investment Law is complicated by the fact that parts of the European industry are subject to the UCITS Directive, while other parts are designated as belonging to the world of alternative investments. The Regulation on Money Market Funds proposed by the European Commission in 2013 is intended to enhance the resistibility of the sector and to ensure financial stability by establishing striact rules regarding the operation of both types of Money Market Funds. The approach chosen – bringing together what has been carefully divided – will increase the complexity and further undermine the consistency of EU Investment Law. Moreover, important elements of the proposal are not in line with both the expectations of the international standard setters and the new emphasis on capital market financing in the EU, and do not appear capable of making European Money Market Funds more crisis-proof.

Date: 2016
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DOI: 10.1515/ecfr-2016-5003

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