Draft EU Money Market Fund Regulation: Initial Assessment

On 4 September 2013 the draft "Proposal for a Regulation of the European Parliament and of the Council on Money Market Funds" (the "Draft Regulation") was officially released by the European Commission (the "Commission"). This follows its unofficial release in April 2013. 

The Draft Regulation contains a radical set of new regulatory measures that will apply to European money market funds ("MMFs"), both in the context of UCITS and also funds within the scope of the Alternative Investment Fund Management Directive 2011/61/EU ("AIFMD").

Among the measures, and perhaps the most significant, is the proposal to require MMFs that operate with a constant net asset value ("CNAV") to establish and maintain a capital buffer of at least 3% of the total value of the money market fund's assets. The only amendments that have been made to the unofficially released version in this regard is that the 3% buffer will be re-assessed three years following the implementation of the