The European Funds and Asset Management Association (EFAMA) and the Institutional Money Market Funds Association (IMMFA) have welcomed the Committee of European Securities Regulators' (CESR) definition of a European money market fund.

The definition features detailed guidelines relating to the management and operation of a money market fund.

Each country will now need to implement the common characterisation of European money market funds in its domestic financial services legislation, and then the harmonised definition will allow investors to compare money market funds across Europe on a like-for-like basis.

"We truly welcome the definition of money market funds and commend CESR on their excellent work," commented Peter de Proft, director general of EFAMA. "The two categories will allow investors to choose between funds with differing objectives, whilst also specifying what may be included in a money market fund. We look forward to continuing to work closely with CESR."

Gail Le Coz, chief executive of IMMFA, added that the guidelines seek to improve investor protection. "IMMFA fully supports and shares that goal, as evidenced by the amendments which we made to our Code of Practice in December 2009. This set of best practice standards for the management and operations of triple-A rated money market funds includes provisions to limit interest rate, credit and liquidity risk and imposes additional disclosure obligations on funds. In many ways, the short-term category reflects the practices that our members have employed for some time."

These guidelines from CESR become effective from 1 July 2010, and a copy of the CESR guidelines is available here.

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