EU money fund rule threatens negative rates management tool

Constant net asset value funds may have to change format during prolonged spells of negative rates


Market participants have been alarmed by a new interpretation of EU rules for money market funds (MMFs) that could make it impossible to manage constant net asset value (CNAV) funds during extended periods of negative interest rates.

The interpretation from the European Securities and Markets Authority (Esma) appears in a May consultation paper on implementing the EU’s MMF regulation. In a section of the paper on disclosure requirements to end-investors, Esma declines to provide instructions

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