On 4 September 2013, the European Commission published a draft regulation on the regulation of European money market funds.  Money market funds are important investors in certain types of securitisation, particularly asset backed commercial paper, and the draft Regulation includes some detailed provisions dealing with this relationship.  This is explained in the recitals: “Due the fact that during the crisis certain securitisations were particularly unstable, it is necessary to impose maturity limits and quality criteria on the underlying assets”.  The limitations imposed are such that the only types of securitisation which are eligible are those with underlying assets consisting of short term corporate debts, such as trade receivables.  Assets linked to the acquisition or financing of services or goods by consumers (such as personal loans, auto loans,  credit card debts and residential mortgages) are expressly excluded.  The draft regulation also requires that the underlying corporate debts be “of high credit quality and liquid”.
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