Money Market Funds ('MMF') update 2018
Overview of MMF regulation
The scope of the Money Market funds regulation concerns all the Undertakings for the Collective Investment of Transferable Securities (UCITS) and Alternative Investment Funds (AIFs) that are established, managed and marketed in the Union and invest in short-term assets (meaning financial assets with a residual maturity not exceeding two years) and have distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment. Moreover, we can find under scope of the Money market Fund regulation all the funds labelled ‘Money Market Fund’ or ‘MMF`.
The Regulation applies directly in every EU Member State on 21 July 2017. Existing money market funds will have to comply with the new Regulation by 21 January 2019.
Regulators are given 6 months to prepare additional guidance and technical standards relating to the Regulation. Within 12 months, each Member State will have to establish a process for authorising money market funds in accordance with the Regulation.
Next steps for MMFs
It is noteworthy to mention that the application for allowing the competent authority to assess whether the UCITS or AIFs is compliant with this Regulation, should be submitted no later than 16 months after the date of entry into force (June 2017). Because the competent authority has up to two month to perform the assessment.
Lastly, 5 years after the date of entry into force the MMFs Regulation, the Commission shall present a report on the feasibility of establishing an 80% EU public debt quota (proposals to introduce such a quota, whereby at least 80% of the assets of public debt CNAV MMFs are to be invested in EU public debt instruments).