EC finalized Regulation (EU) 2017/1131, which lays down rules for money market funds (MMFs) established, managed, or marketed in the EU. These rules concern the financial instruments eligible for investment by an MMF, the portfolio of an MMF, the valuation of the assets of an MMF, and the reporting requirements in relation to an MMF.
This regulation applies to collective investment undertakings that require authorization as UCITS or are authorized as UCITS under Directive 2009/65/EC or are alternative investment funds (AIFs) under Directive 2011/61/EU; invest in short-term assets; and have distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment. Member states shall not add any additional requirements in the field covered by this regulation. With regard to reporting requirements, the regulation states that, for each MMF that it manages, the MMF manager shall report information to the competent authority of the MMF on at least a quarterly basis. For an MMF whose total assets under management do not exceed EUR 100 million, the MMF manager shall report to the competent authority of the MMF on at least an annual basis. The manager of an MMF shall, upon, request provide the information reported pursuant to the first and second subparagraphs also to the competent authority of the manager of an MMF, if different from the competent authority of the MMF.
The reported information shall include information on the type and characteristics of the MMF; portfolio indicators such as the total value of assets, NAV, WAM, WAL, maturity breakdown, liquidity, and yield; results of stress tests and the proposed action plan; certain information on the assets held in the MMF portfolio; and certain information on liabilities of the MMF. If necessary and duly justified, the competent authorities may solicit additional information. In addition, for each Low Volatility Net Asset Value (LVNAV) MMF that it manages, the MMF manager shall report every event in which:
The price of an asset valued by using the amortized cost method in accordance with the first subparagraph of Article 29(7) deviates from the price of that asset calculated in accordance with Article 29(2), (3) and (4) by more than 10 basis points
The constant NAV per unit or share calculated in accordance with Article 32(1) and (2) deviates from the NAV per unit or share calculated in accordance with Article 30 by more than 20 basis points
A situation mentioned in Article 34(3) occurs and the measures taken by the board in accordance with points (a) and (b) of Article 34(1)
ESMA shall develop draft implementing technical standards to establish a reporting template that shall contain all this information. ESMA shall submit those draft implementing technical standards to the EC by January 21, 2018. Power is conferred on the EC to adopt the implementing technical standards in accordance with Article 15 of Regulation (EU) No 1095/2010. Competent authorities shall transmit to ESMA all information received pursuant to this Article. Such information shall be transmitted to ESMA no later than 30 days after the end of the reporting quarter. ESMA shall collect the information to create a central database of all MMFs established, managed, or marketed in the EU. ECB shall have a right of access to that database, for statistical purposes only. This regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from July 21, 2018, with the exception of Article 11(4), Article 15(7), Article 22, and Article 37(4), which shall apply from July 20, 2017.
Related Link: Regulation (EU) 2017/1131
Effective Date: July 20, 2017
Keywords: Europe, EC, Banking, ESMA, Implementing Technical Standards, MMF, Securities, Asset Management