The Institute of International Finance (IIF) submitted a response to the European Securities and Markets Authority (ESMA) request for comment on the topic of EU Money Market Fund Regulation – legislative review on June 25. 

The IIF recognizes that the European Union has advanced considerable legislative efforts to promote the smooth functioning and resilience of MMFs in the region. However, the unprecedented COVID-19 crisis has revealed some further structural vulnerabilities in MMF and short-term funding markets that should be addressed through a holistic review of the impact of market structure on the resilience of the short-term funding markets. 

The IIF believes that a holistic review of market structure impacts can produce targeted and proportionate measures for the specific segments of the MMF sector and short-term funding markets that experienced significant stress in the March 2020 market turmoil. We also strongly encourage ESMA to coordinate its initiatives with respect to the NBFI sector, short-term funding markets and MMFs with other standard-setting bodies and regulators and supervisors in key jurisdictions. The response letter reiterates the IIF’s frequent calls to seek globally harmonized regulation and the application of the principle of ‘same activity, same risk, same regulation’ to the greatest extent possible, taking into account local specificities, and jurisdictional differences in market and product structures. 

The letter also includes IIF’s response to the 12 questions raised in the consultation report.