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The consultation focuses on:
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. The consultation raises a series of issues and policy options aimed at maintaining investor confidence in money market funds. Issues at the centre of the consultation are the role of money market funds in the management of liquidity for investors, their engagement in the securities lending and repo markets as well as their systemic involvement in the overall financial marketplace. Issues such as the various methods for calculating the net asset value (NAV) for money market funds are also addressed.
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. The above-mentioned ESMA guidelines and the Commission's consultation on shadow banking has already raised the general issues that arise in this context and the current consultation aims to deepen the Commission's insight into the potential systemic and investor implications raised by a fund's use of EPM techniques.
Finally, the consultation raises the more long-term policy challenge that arises in the area of investment funds: how to create a European investment culture where retail investors take a longer-term and strategic view when placing their savings with the providers of fund products and have access to products suited to this. This would also include exploring ways for UCITS to participate in social businesses.
Responses to this wide-ranging consultation are invited by 18 October 2012 at the latest.