On 16 February 2022, the European Securities and Markets Authority (ESMA) issued a final report containing an opinion setting out proposed reforms to the regulatory framework for money market funds (MMFs).  The final report is the outcome of the work that ESMA conducted on the reforms of the EU MMF regulatory framework in light of the lessons learnt from the difficulties faced by MMFs during the COVID-19 crisis in March 2020, in the context of the upcoming review of the MMF Regulation. The opinion is located in the annex to the final report and a summary of ESMA’s proposals can be found on page 16. The proposals themselves are intended to improve the resilience of MMFs by addressing in particular liquidity issues and the threshold effects for constant net asset value (CNAV) MMFs. Following the receipt of the opinion, the European Commission will review the adequacy of the MMF Regulation as foreseen in its review clause which provides that “by 21 July 2022, the Commission shall review the adequacy of this Regulation from a prudential and economic point of view, following consultations with ESMA”.

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