Commission Publishes Proposals for a Regulation on MMFs

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On September 4, a proposed Regulation on money market funds (MMFs) was published by the Commission, accompanied by a press release, impact assessment, FAQs and various other documents. These can be found, along with further information, on a specialized webpage set up by the Commission. The proposed Regulation’s purpose is to help MMFs, through enhancing their liquidity profile and stability, better withstand redemption pressure in stressed market conditions.

Among other things, the Regulation contains provisions on:

  • Prescribed levels of daily and weekly liquidity;
  • Clear labeling;
  • A capital bidder of 3% for constant net asset value funds;
  • Customer profiling policies; and
  • Requirements for the MMF manager regarding internal credit risk assessment.

The proposed Regulation and impact assessment are currently draft versions; the final text is due for publication soon. The proposed Regulation will now go to the European Parliament and Council of the EU for consideration, and the Commission has stated that it expects the Regulation to be agreed upon in 2014.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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