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EU Money Funds Face Stricter Rules

Proposed regulations would allow many funds to retain constant NAV.

By Silla Brush, Bloomberg | Updated on June 16, 2016

The European Union is moving closer to imposing tighter restrictions on money-market funds after years of wrangling, while stopping short of restrictions the industry said would upend the 1 trillion-euro ($1.1 trillion) market.

The plan set for approval by EU finance ministers on Friday would require funds to toughen up risk management and invest in more liquid assets that can be easily traded in volatile markets should investors rush to pull out their money. It offers a way for many funds to continue quoting a fixed share price, known as a constant net-asset value, to banks, corporations and other investors who rely on them for short-term funding.

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