The European Commission launched a public consultation on a future framework for investment funds. The consultation raises a series of issues and policy options aimed at maintaining investor confidence in money market funds. According to the Commission, the consultation raises a series of issues and policy options aimed at maintaining investor confidence in money market funds. The contributions can be made until 18 of October.

The Commission launched an in-depth consultation on issues arising in the area of investment funds. This consultation is seeking views on the issue of money market funds and how such funds should be regulated in future; the fund industry's involvement in securities lending and repurchase (repo) arrangements; and the fund industry's exposure to certain OTC derivatives that, in future, will be subject to central clearing and the fund industry's approach to investors' redemptions. MEPs adopted the legislation to make trade over-the-counter (OTC) derivatives safer and more transparent.

In particular, the consultation aims to further clarify the interaction between the debate on shadow banking and the role of investment funds. 'Shadow banking' is a general term employed to categorise all entities that engage in maturity transformation without being regulated as banks. 'Money market funds' are investment vehicles where households, corporate treasurers or insurance companies can obtain a relatively safe and short-term investment for surplus cash.

The consultation builds on and is complementary to the European Securities and Markets Authority's (ESMA) guidelines on ETF (exchange-traded funds) and other UCITS issues of 25 July. An important focus for the consultation is also a UCITS fund manager's employment of so-called efficient portfolio management (EPM) techniques. The use of EPM techniques is widespread and, in the industry's view, they are an essential tool for generating additional revenue for the fund and its investors. EPM includes securities lending and repurchase transactions as well as the management of collateral that is received or granted to secure these transactions.