Regulating money market funds: first reaction

Author: Gemma Varriale | Published: 1 May 2012

Recently published proposals from the International Organisation of Securities Commissions (Iosco) have not eliminated concern from key market participants on regulating money market funds (MMFs).

Speaking at the European Commission’s (EC) shadow banking conference on April 27, Brian Reid, chief economist at the Investment Company Institute, predicted problems with the proposed capital rules.

"The proposals largely that are being fashioned and considered are designed to eliminate all the risk," said Reid. "That’s not possible if we want to keep these products viable in the marketplace."

The chief economist suggested that capital could be put in place to help fund managers adjust to market liquidity issues, allowing them to sell at...