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European Commission Letter on Money Market Fund Regulation

02 February 2018

The European Securities and Markets Authority (ESMA) has published a reply received on 19 January from the European Commission (EC).

The letter is in response to ESMA’s cover letter that accompanied the publication, in November 2017, of its final report on Technical advice, draft implementing technical standards and guidelines under the Money Market Fund (MMF) Regulation.

ESMA, in its cover letter, noted that the views of the Legal Service of the Commission had been sought on the compatibility of the practice of share cancellation, also known as reverse distribution or share destruction, with the MMF Regulation.

On 19 January ESMA received the European Commission’s reply, which indicates that this practice is not compatible with the Regulation. ESMA is now assessing the consequences of the letter and considering possible next steps with a view to promoting convergent application of the Regulation across the EU.