Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (Text with EEA relevance. )

30.6.2017

EN

Official Journal of the European Union

L 169/8

(1)

Money market funds (MMFs) provide short-term finance to financial institutions, corporations and governments. By providing finance to those entities, MMFs contribute to the financing of the economy of the Union. Those entities use their investments in MMFs as an efficient way to spread their credit risk and exposure, rather than relying solely on bank deposits.

(2)

On the demand side, MMFs are short-term cash management tools that provide a high degree of liquidity, diversification and stability of value of the principal invested, combined with a market-based yield. MMFs are mainly used by corporations seeking to invest their excess cash for a short time frame. MMFs, therefore, represent a crucial link bringing together demands and offers of short-term cash.

(3)

Events that occurred during the financial crisis have shed light on several features of MMFs that make them vulnerable when there are difficulties in financial markets in which case MMFs could spread or amplify risks throughout the financial system. When the prices of the assets in which an MMF has invested start to decrease, especially during stressed market situations, the MMF cannot always maintain its promise to redeem immediately and to preserve the principal value of a unit or share issued by the MMF to investors. That situation, which according to the Financial Stability Board (FSB) and the International Organisation of Securities Commissions (IOSCO) can be particularly serious for constant or stable net asset value MMFs, could trigger substantial and sudden redemption requests, potentially triggering broader macroeconomic consequences.

(4)

Large redemption requests could force MMFs to sell some of their investment assets in a declining market, potentially fuelling a liquidity crisis. In those circumstances, money market issuers can face severe funding difficulties if the markets for commercial paper and other money market instruments dry up. That in turn could lead to contagion within the short-term funding market and result in direct and major difficulties in the financing of financial institutions, corporations and governments, and thus the economy.

(5)

Asset managers, backed by sponsors, can decide to provide discretionary support to maintain the liquidity and the stability of their MMFs. Sponsors are often forced to support their sponsored MMFs that are losing value due to reputational risk and fear that panic could spread into sponsors’ other businesses. Depending on the size of the MMF and the extent of the redemption pressure, sponsor support could reach proportions that exceed their readily available reserves. Therefore, an MMF should not receive external support.

(6)

In order to preserve the integrity and stability of the internal market, it is necessary to lay down rules regarding the operation of MMFs, in particular on the composition of the portfolio of MMFs. Those rules are intended to make MMFs more resilient and limit contagion channels. Uniform rules across the Union are necessary to ensure that MMFs are able to honour redemption requests from investors, especially during stressed market situations. Uniform rules on the portfolio of an MMF are also required to ensure that MMFs are able to face substantial and sudden redemption requests by a large group of investors.

(7)

Uniform rules on MMFs are furthermore necessary to ensure the smooth operation of the short-term funding market for financial institutions, corporate issuers of short-term debt and governments. They are also required to ensure the equal treatment of investors in an MMF and to avoid late redeemers being disadvantaged if redemptions are temporarily suspended or if an MMF is liquidated.

(8)

It is necessary to provide for the harmonisation of prudential requirements related to MMFs by setting out clear rules that impose direct obligations on MMFs and the managers of MMFs throughout the Union. Such harmonisation would enhance the stability of MMFs as a source of short-term finance for governments and the corporate sector across the Union. It would also ensure that MMFs remain a reliable tool for the cash management needs of industry in the Union.

(9)

The Guidelines on a common definition of European money market funds adopted by the Committee of European Securities Regulators on 19 May 2010 to create a minimum level playing field for MMFs in the Union were, one year after their entry into force, applied by only 12 Member States, thus demonstrating the persistence of divergent national rules. Different national approaches fail to address the vulnerabilities of money markets in the Union and fail to mitigate contagion risks, thereby endangering the functioning and stability of the internal market, as evidenced during the financial crisis. The common rules on MMFs provided for in this Regulation therefore aim to provide a high level of protection for investors and to prevent and mitigate any potential contagion risks resulting from possible runs by investors on MMFs.

(10)

In the absence of a regulation setting out rules on MMFs, diverging measures might continue to be adopted at national level. Such measures would continue to cause significant distortions of competition resulting from significant differences in essential investment protection standards. Diverging requirements on portfolio composition, eligible assets, their maturity, liquidity and diversification, as well as on credit quality of issuers and of money market instruments, lead to different levels of investor protection because of the different levels of risk attached to the investment proposition associated with an MMF. It is therefore essential to adopt a uniform set of rules in order to avoid contagion of the short-term funding market which would put at risk the stability of the Union’s financial market. In order to mitigate systemic risk, constant net asset value MMFs (CNAV MMFs) should only operate in the Union as public debt CNAV MMFs.

(11)

The new rules on MMFs build upon Directive 2009/65/EC of the European Parliament and of the Council (4), which forms the legal framework governing the establishment, management and marketing of undertakings for collective investment in transferable securities (UCITS) in the Union, and also upon Directive 2011/61/EU of the European Parliament and of the Council (5), which forms the legal framework governing the establishment, management and marketing of alternative investment funds (AIFs) in the Union.

(12)

In the Union, collective investment undertakings can operate as UCITS, managed by UCITS management companies or UCITS investment companies authorised under Directive 2009/65/EC, or as AIFs, managed by alternative investment fund managers (AIFMs) authorised or registered under Directive 2011/61/EU. The new rules on MMFs build on the existing legal framework established by those Directives, including the acts adopted for their implementation, and should therefore apply in addition to those Directives. Furthermore, the management and marketing rules laid down in the existing legal framework should apply to MMFs taking into account whether they are UCITS or AIFs. Equally, the rules on the cross-border provision of services and freedom of establishment laid down in Directives 2009/65/EC and 2011/61/EU should apply correspondingly to the cross-border activities of MMFs. At the same time, a number of rules in relation to the investment policies of UCITS laid down in Chapter VII of Directive 2009/65/EC should be explicitly disapplied.

(13)

Harmonised rules should apply to collective investment undertakings whose characteristics correspond to those associated with an MMF. For UCITS and AIFs that have the objective of offering returns in line with money market rates, or of preserving the value of the investment, and that seek to achieve those objectives by investing in short-term assets such as money market instruments or deposits, or entering into reverse repurchase agreements or certain derivative contracts with the sole purpose of hedging risks inherent to other investments of the fund, compliance with the new rules on MMFs should be mandatory.

(14)

The specificity of MMFs results from the combination of the assets in which they invest and the objectives they pursue. The objective of offering returns in line with money market rates and the objective of preserving the value of an investment are not mutually exclusive. An MMF can have either one of those objectives or both objectives jointly.

(15)

The objective of offering returns in line with money market rates is to be understood in a broad sense. The anticipated return does not need to be perfectly aligned with EONIA, Libor, Euribor or any other relevant money market rate. An objective which seeks to outperform the money market rate by a slight margin is not to be considered to take a UCITS or AIF outside the scope of the new uniform rules provided for in this Regulation.

(16)

The objective of preserving the value of the investment is not to be understood to be a capital guarantee promised by an MMF. It is to be understood as an aim that a UCITS or AIF seeks to pursue. A decrease in value of the investments does not imply that the collective investment undertaking has changed its objective of preserving the value of an investment.

(17)

It is important that UCITS and AIFs that have the characteristics of MMFs be identified as MMFs and that their capacity to comply on an ongoing basis with the new uniform rules on MMFs be explicitly verified. For that purpose, competent authorities should authorise MMFs. For UCITS, their authorisation as MMFs should be part of the authorisation as UCITS in accordance with the harmonised procedures under Directive 2009/65/EC. For AIFs, as they are not subject to harmonised authorisation and supervision procedures under Directive 2011/61/EU, it is necessary to provide for common basic rules on authorisation that mirror the existing harmonised rules for UCITS. Such procedures should ensure that the manager of an AIF authorised as an MMF is an AIFM authorised in accordance with Directive 2011/61/EU.

(18)

In order to ensure that all collective investment undertakings displaying the characteristics of MMFs are subject to the new common rules on MMFs, the use of the designation ‘MMF’, or any other term that suggests that a collective investment undertaking shares the characteristics of MMFs, should be prohibited unless that undertaking is authorised as an MMF under this Regulation. To prevent circumvention of the rules in this Regulation, competent authorities should monitor the market practices of collective investment undertakings established or marketed in their jurisdiction to verify that they do not misuse the MMF designation or suggest that they are an MMF without complying with the new legal framework.

(19)

Given that UCITS and AIFs can take different legal forms that do not necessarily endow them with legal personality, the provisions in this Regulation requiring MMFs to take action are to be understood to refer to the manager of the MMF in cases where the MMF is constituted as a UCITS or as an AIF that is not in a position to act by itself because it has no legal personality of its own.

(20)

Rules on the portfolio of MMFs should clearly identify the categories of assets that are eligible for investment by MMFs and the conditions under which they are eligible. To ensure the integrity of MMFs, MMFs should also be prohibited from engaging in certain financial transactions that would endanger their investment strategy and objectives.

(21)

Money market instruments are transferable instruments normally dealt in on the money market and include treasury and local authority bills, certificates of deposits, commercial papers, bankers’ acceptances, and medium- or short-term notes. Money market instruments should be eligible for investment by MMFs only insofar as they comply with maturity limits and are considered by an MMF to be of high credit quality.

(22)

In addition to the case in which an MMF invests in bank deposits in accordance with its fund rules or its instruments of incorporation, it should be possible to allow an MMF to hold ancillary liquid assets, such as cash in a bank account accessible at any time. The holding of such ancillary liquid assets could be justified, inter alia, in order to cover current or exceptional payments, in the case of sales, for the time necessary to reinvest in eligible assets.

(23)

Securitisations and asset-backed commercial paper (ABCPs), should be considered to be eligible to the extent that they respect certain requirements. Due to the fact that during the financial crisis certain securitisations were particularly unstable, certain quality criteria should be imposed on securitisations and ABCPs so that only those securitisations and ABCPs that perform well should be eligible. Until such time as the Regulation of the European Parliament and of the Council for simple, transparent and standardised (STS) securitisations that is proposed (the proposed Regulation on STS securitisations) is adopted and becomes applicable for the purposes of this Regulation, MMFs should be allowed to invest in securitisations and ABCPs up to a limit of 15 % of their assets. The Commission should adopt a delegated act to ensure that the criteria identifying STS securitisations apply for the purposes of this Regulation. Once that delegated act applies, MMFs should be allowed to invest in securitisations and ABCPs up to a limit of 20 % of their assets, whereby up to 15 % should be able to be invested in securitisations and ABCPs which are not STS.

(24)

An MMF should be allowed to invest in deposits to the extent that it is able to withdraw the money at any time. The effective possibility of withdrawal would be impaired if the penalties associated with early withdrawal are so high as to exceed the interest accrued prior to withdrawal. For that reason, an MMF should take due care not to make deposits with a credit institution that requires above average penalties or to engage in too long deposits where that results in too high penalties.

(25)

In order to take account of the differences in banking structures across the Union, particularly in smaller Member States or in Member States where there is a highly concentrated banking sector, and where it would be uneconomical for an MMF to use the services of a credit institution in another Member State, such as where that would necessitate a currency exchange with all the associated costs and risks, some flexibility in the diversification requirement for deposits with the same credit institution should be allowed.

(26)

Financial derivative instruments eligible for investment by an MMF should only serve the purpose of hedging interest rate and currency risk and should only have as an underlying instrument interest rates, foreign exchange rates, currencies or indices representing those categories. Any use of derivatives for another purpose or on other underlying assets should be prohibited. Derivatives should only be used as a complement to the strategy of an MMF and not as the main tool for achieving the MMF’s objectives. In the event that an MMF invests in assets labelled in another currency than the currency of the MMF, it is expected that the manager of the MMF would hedge the entire currency risk exposure, including via derivatives. MMFs should be entitled to invest in financial derivative instruments if that instrument is traded on a regulated market as referred to in point (a), (b) or (c) of Article 50(1) of Directive 2009/65/EC or traded over-the-counter (OTC) provided certain conditions are fulfilled.

(27)

Reverse repurchase agreements should be able to be used by MMFs as a means to invest excess cash on a very short-term basis, provided that the position is fully collateralised. In order to protect investors, it is necessary to ensure that the collateral provided in the framework of reverse repurchase agreements is of high quality and does not display a high correlation with the performance of the counterparty, in order to avoid a negative impact in the event of default of the counterparty. In addition, an MMF should be allowed to invest in repurchase agreements up to a limit of 10 % of its assets. Other efficient portfolio management techniques, including securities lending and borrowing, should not be used by an MMF as they are likely to impinge on achieving the investment objectives of the MMF.

(28)

In order to limit risk-taking by MMFs, it is essential to reduce counterparty risk by subjecting the portfolio of MMFs to clear diversification requirements. To that end, reverse repurchase agreements should be fully collateralised and, in order to limit the operational risk, a single reverse repurchase agreement counterparty should not account for more than 15 % of an MMF’s assets. All OTC derivatives should be subject to Regulation (EU) No 648/2012 of the European Parliament and of the Council (6).

(29)

For prudential reasons and in order to avoid the exercise of significant influence over the management of an issuing body by an MMF, excessive concentration by an MMF in investments issued by the same issuing body should be avoided.

(30)

MMFs operating solely as employee savings schemes should be able to diverge from certain requirements applicable to investments in other MMFs insofar as the participants in such schemes, who are natural persons, are subject to restrictive redemption conditions that are not linked to market developments but instead related to particular and predefined life events, such as retirement, and other special circumstances, including but not limited to the acquisition of a main residence, divorce, sickness or unemployment. It is important for employees to be allowed to invest in MMFs, which are considered to be one of the safest short-term investments. Such derogation does not endanger the objective of this Regulation to ensure financial stability, as employees investing in MMFs via their employee savings schemes cannot redeem their investment on demand. Redemptions are only able to occur in the case of certain predefined life events. Therefore, even in stressed market situations, employees will not be able to redeem their investment in MMFs.

(31)

MMFs should have a responsibility to invest in high-quality eligible assets. Therefore, an MMF should have a prudent internal credit quality assessment procedure for determining the credit quality of the money market instruments, securitisations and ABCPs in which it intends to invest. In accordance with Union law limiting over-reliance on credit ratings, it is important that MMFs avoid mechanistic reliance and over-reliance on ratings issued by rating agencies. MMFs should be able to use ratings as a complement to their own assessment of the quality of eligible assets. Managers of MMFs should undertake a new assessment of money market instruments, securitisations and ABCPs whenever there is a material change, in particular when it comes to the attention of the manager of an MMF that a money market instrument, securitisation or ABCP is downgraded below the two highest short-term credit ratings provided by any credit rating agency regulated and certified in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council (7). To that end, the manager of an MMF should be able to establish an internal procedure for the selection of credit rating agencies suited to the specific investment portfolio of the MMF and for determining the frequency at which the MMF should monitor the ratings of those agencies. The selection of credit rating agencies should remain consistent over time.

(32)

Taking note of the work done on reducing investor over-reliance on credit ratings by international bodies, such as IOSCO and the FSB, as well as in Union law, including in Regulation (EC) No 1060/2009 and Directive 2013/14/EU of the European Parliament and of the Council (8), it is not appropriate to prohibit any product, including MMFs, from soliciting or financing an external credit rating.

(33)

In order to ensure that managers of MMFs do not use different assessment criteria for evaluating the credit quality of a money market instrument, securitisation or ABCP and thus attribute different risk characteristics to the same instrument, it is essential that managers of MMFs rely on the same criteria. To that end, the minimum criteria for the assessment of a money market instrument, securitisation and ABCP should be harmonised. Examples of internal credit quality assessment criteria are quantitative measures on the issuer of the instrument, such as financial ratios, balance sheet dynamics and profitability guidelines, each of which is evaluated and compared to those of industry peers and groups, and qualitative measures on the issuer of the instrument, such as management effectiveness and corporate strategy, each of which is analysed with a view to determining that the issuer’s overall strategy does not impede on its future credit quality. A favourable outcome of the internal credit quality assessment should reflect sufficient creditworthiness of the issuer of the instruments and sufficient credit quality of the instruments.

(34)

In order to develop a transparent and coherent internal credit quality assessment procedure, the manager of an MMF should document the procedure and the credit quality assessments. That requirement should ensure that the procedure follows a clear set of rules that can be monitored and that the methodologies employed are communicated, upon request, to the investors and competent authorities in accordance with this Regulation.

(35)

To reduce the portfolio risk of MMFs, it is important to set maturity limitations, providing for a maximum allowable weighted average maturity (WAM) and weighted average life (WAL).

(36)

WAM is used to measure the sensitivity of an MMF to changing money market interest rates. When determining the WAM, managers of MMFs should take into account the impact of financial derivative instruments, deposits, repurchase agreements and reverse repurchase agreements and reflect their effect on the interest rate risk of the MMF. When an MMF enters into a swap transaction in order to gain exposure to a fixed rate instrument instead of a floating rate, that fact should be taken into account for determining the WAM.

(37)

WAL is used to measure the credit risk of an MMF’s portfolio: the longer the reimbursement of the principal is postponed, the higher the credit risk. WAL is also used to limit the liquidity risk of an MMF’s portfolio. In contrast to the calculation of the WAM, the calculation of the WAL for floating rate securities and structured financial instruments does not permit the use of interest rate reset dates and instead only uses a financial instrument’s stated final maturity. The maturity used for calculating the WAL is the residual maturity until legal redemption, since that is the only date on which the management company can reasonably expect that the instrument will have been reimbursed. Due to the particular nature of the underlying assets for some securitisations and ABCPs, in the case of amortising instruments, the WAL should be able to be based on the maturity calculation for amortising instruments either on the contractual amortisation profile of such instruments or the amortisation profile of the underlying assets from which the cash-flows for the redemption of such instruments result.

(38)

In order to strengthen MMFs’ ability to face redemptions and prevent their assets from being liquidated at heavily discounted prices, MMFs should hold on an ongoing basis a minimum amount of liquid assets that mature daily or weekly. Daily maturing assets should comprise assets such as cash, securities that mature within one working day and reverse repurchase agreements. Weekly maturing assets should comprise assets such as cash, securities that mature within one week and reverse repurchase agreements. In the case of public debt CNAV MMFs and low volatility net asset value MMFs (LVNAV MMFs), a limited percentage of government paper with a residual maturity of 190 days that can be settled within one working day should also be able to be counted towards the weekly liquidity requirements. In the case of variable net asset value MMFs (VNAV MMFs), a limited percentage of money market instruments or units or shares of eligible MMFs should also be able to be counted towards the weekly liquidity requirements provided they can be settled within five working days. To calculate the proportion of daily and weekly maturing assets, the legal redemption date of the asset should be used. The possibility for the manager of an MMF to terminate a contract on a short-term basis can be taken into consideration. For instance, if a reverse repurchase agreement can be terminated by giving prior notice of one working day, it should count as a daily maturing asset. If the manager has the possibility of withdrawing cash from a deposit account by giving prior notice of one working day, it should count as a daily maturing asset. When a financial instrument embeds a put option and the put can be freely exercised on a daily basis, or within five working days, and the strike price of the put is close to the expected value of the instrument, that instrument should count respectively as a daily or weekly maturing asset.

(39)

Given that MMFs can invest in assets with different maturity ranges, it is important for investors to be able to distinguish between different categories of MMFs. Therefore, an MMF should be classified as either a short-term MMF or as a standard MMF. Short-term MMFs have the objective of offering money market rate returns while ensuring the highest possible level of safety for the investors. With short WAM and WAL, the duration risk and credit risk of short-term MMFs are kept at low levels.

(40)

Standard MMFs have the objective of offering returns slightly higher than money market returns, and they therefore invest in assets that have an extended maturity. To achieve such outperformance, standard MMFs should be permitted to employ extended limits for the portfolio risk such as WAM and WAL.

(41)

Under Article 84 of Directive 2009/65/EC, the managers of MMFs that are UCITS have the possibility of temporarily suspending redemptions in exceptional cases where circumstances so require. Under Article 16 of Directive 2011/61/EU and in Article 47 of the Commission Delegated Regulation (EU) No 231/2013 (9), the managers of MMFs that are AIFs can use special arrangements in order to cope with a supervening illiquidity of the funds’ assets.

(42)

In order to ensure appropriate liquidity management, MMFs should establish sound policies and procedures to get to know their investors. The policies that the manager of an MMF puts in place should help in understanding the MMF’s investor base, to the extent that large redemptions could be anticipated. So that an MMF does not face sudden massive redemptions, particular attention should be paid to large investors representing a substantial portion of the MMF’s assets, such as with one investor representing more than the proportion of daily maturing assets. The manager of an MMF should whenever possible look at the identity of its investors, even if they are represented by nominee accounts, portals or any other indirect buyer.

(43)

As part of prudent risk management, MMFs should, at least bi-annually, conduct stress testing. The manager of an MMF is expected to act in order to strengthen the MMF’s robustness whenever the results of stress testing point to vulnerabilities.

(44)

In order to reflect the actual value of assets, the use of mark-to-market should be the preferred method of valuation. The manager of an MMF should not be allowed to use mark-to-model when mark-to-market provides a reliable value of the asset, as mark-to-model is prone to providing less accurate valuation. Assets such as treasury and local authority bills, medium- or short-term notes are generally the ones that are expected to have a reliable mark-to-market value. For valuing commercial papers or certificates of deposit, the manager of an MMF should check if accurate pricing is provided by a secondary market. The buy-back price offered by the issuer is also considered to represent a good estimate of the value of the commercial paper. Some assets can be inherently difficult to value based on market prices, for example some OTC derivatives which are thinly traded. Where that is the case and where mark-to-market does not provide a reliable value of the assets, the manager of an MMF should assign a fair value to the asset by using mark-to-model, for example the manager of an MMF should use market data such as yields on comparable issues and comparable issuers or by discounting the asset’s cash-flows. Mark-to-model uses financial models to allocate a fair value to an asset. Such models can, for example, be developed by the MMF itself, or the MMF can use existing models from external parties such as data vendors.

(45)

Public debt CNAV MMFs have the objective of preserving the capital of the investment while ensuring a high degree of liquidity. The majority of public debt CNAV MMFs have a net asset value (NAV) per unit or share set, for example, at EUR 1, USD 1 or GBP 1, when they distribute the income to the investors. Other public debt CNAV MMFs accumulate income in the NAV of the fund while maintaining the intrinsic value of the asset at a constant value.

(46)

To allow for the specificities of public debt CNAV MMFs and LVNAV MMFs, they should also be permitted to use the internationally recognised amortised cost method as set out under international accounting standards adopted by the Union for certain assets. Nevertheless, for the purpose of ensuring that the difference between the constant NAV per unit or share and the NAV per unit or share is monitored at all times, public debt CNAV MMFs and LVNAV MMFs should also calculate the value of their assets on the basis of mark-to-market or mark-to-model.

(47)

As an MMF should publish a NAV that reflects all movements in the value of its assets, the published NAV should be rounded at a maximum to the nearest basis point or its equivalent. As a consequence, when the NAV is published in a specific currency, for example EUR 1, the incremental change in value should be done every EUR 0,0001. In the case of a NAV at EUR 100, the incremental change in value should be done every EUR 0,01. In addition, if the MMF is a public debt CNAV MMF or a LVNAV MMF, the MMF should be able to publish the constant NAV and the difference between the constant NAV and the NAV. In that case, the constant NAV is calculated by rounding the NAV to the nearest cent for a NAV at EUR 1 (every EUR 0,01 move).

(48)

In order to be able to mitigate potential investor redemptions in times of severe market stress, public debt CNAV MMFs and LVNAV MMFs should have in place provisions for liquidity fees and redemption gates to ensure investor protection and prevent a ‘first mover advantage’. The liquidity fee should adequately reflect the cost to the MMF of achieving liquidity and should not amount to a penalty charge that would offset losses incurred by other investors as a result of the redemption.

(49)

External support provided to an MMF with a view to maintaining either liquidity or stability, or de facto having such effects, increases the contagion risk between the MMF sector and the rest of the financial sector. Third parties, including credit institutions, other financial institutions or legal entities in the same group as the MMF, providing such support could have an interest in doing so, either because they have an economic interest in the management company managing the MMF or because they want to avoid any reputational damage in the event that their name is associated with the failure of an MMF. Because those third parties do not always commit explicitly to providing or guaranteeing the support, there is uncertainty whether such support will be granted when the MMF needs it. In those circumstances, the discretionary nature of sponsor support contributes to uncertainty among market participants about who will bear losses of the MMF when they do occur. That uncertainty likely makes MMFs even more vulnerable to runs during periods of financial instability, when broader financial risks are most pronounced and when concerns arise about the health of the sponsors and their ability to provide support to affiliated MMFs. For those reasons, external support for MMFs should be prohibited.

(50)

Prior to investing in an MMF, investors should be clearly informed whether the MMF is of a short-term nature or of a standard nature and whether the MMF is a public debt CNAV MMF, a LVNAV MMF or a VNAV MMF. In order to avoid misplaced expectations from the investor, it should also be clearly stated in any marketing document that an MMF is not a guaranteed investment vehicle. MMFs should also make available certain other information to investors on a weekly basis, including the maturity breakdown of the portfolio, the credit profile and details of the 10 largest holdings in the MMF.

(51)

In addition to reporting already required under Directive 2009/65/EC or 2011/61/EU and to ensure that competent authorities are able to detect, monitor and respond to risks in the MMF market, MMFs should report to their competent authorities a detailed list of information on the MMF, including the type and characteristics of the MMF, portfolio indicators and information on the assets held in the portfolio. Competent authorities should collect that data in a consistent way throughout the Union in order to obtain a substantive knowledge of the main evolutions of the MMF market. To facilitate a collective analysis of potential impacts of the MMF market in the Union, such data should be transmitted to the European Supervisory Authority (European Securities and Markets Authority) (ESMA), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (10), which should create a central database of MMFs.

(52)

The competent authority of an MMF should verify whether the MMF is able to comply with this Regulation on an ongoing basis. Therefore, competent authorities should be given all the supervisory and investigatory powers, including the ability to impose certain penalties and measures, necessary for the exercise of their functions with respect to this Regulation. Those powers should be without prejudice to powers existing under Directives 2009/65/EC and 2011/61/EU. The competent authorities of the UCITS or AIF should also verify compliance of all collective investment undertakings that display the characteristics of MMFs and that are in existence at the time this Regulation enters into force.

(53)

In order to specify further technical elements of this Regulation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU) should be delegated to the Commission in respect of the introduction of a cross-reference to the criteria for STS securitisations and ABCPs, in respect of specifying the quantitative and qualitative liquidity and credit quality requirements applicable to assets, and in respect of specifying the criteria for credit quality assessment. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (11). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(54)

The Commission should also be empowered to adopt implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1095/2010. ESMA should be entrusted with drafting implementing technical standards for submission to the Commission with regard to a reporting template containing information on MMFs for competent authorities.

(55)

ESMA should be able to exercise all the powers conferred on it under Directives 2009/65/EC and 2011/61/EU with respect to this Regulation. It is also entrusted with developing draft implementing technical standards.

(56)

By 21 July 2022, the Commission should undertake a review of this Regulation. That review should consider the experience acquired in applying this Regulation and analyse the impact on the different economic aspects attached to MMFs. It should also consider the impact on investors, MMFs and the managers of MMFs in the Union. It should also assess the role that MMFs play in purchasing debt issued or guaranteed by the Member States, while taking into account the specific characteristics of such debt given that it plays a vital role in financing Member States. In addition, the review should take into account the report referred to in Article 509(3) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (12), the impact of this Regulation on short-term financing markets, and regulatory developments at international level. Finally, by 21 July 2022, the Commission should present a report on the feasibility of establishing an 80 % EU public debt quota, since the issuance of EU short-term public debt instruments is governed by Union law, which therefore justifies, from a prudential supervisory point of view, a preferential treatment as opposed to non-EU public debt. Given the current scarcity of EU short-term public debt instruments and the uncertainty with respect to the development of the newly established LVNAV MMFs, the Commission should review the viability of establishing an 80 % EU public debt quota by 21 July 2022, including an assessment of whether the LVNAV MMF model has become an appropriate alternative to non-EU public debt CNAV MMFs.

(57)

The new uniform rules on MMFs provided for in this Regulation should comply with Directive 95/46/EC of the European Parliament and of the Council (13) and with Regulation (EC) No 45/2001 of the European Parliament and of the Council (14).

(58)

Since the objectives of this Regulation, namely to ensure uniform prudential, governance and transparency requirements that apply to MMFs throughout the Union, while taking full account of the need to balance safety and reliability of MMFs with the efficient operation of the money markets and the cost for its various stakeholders, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(59)

The new uniform rules on MMFs provided for in this Regulation respect the fundamental rights and observe the principles recognised in particular by the Charter of Fundamental Rights of the European Union and notably consumer protection, the freedom to conduct a business and the protection of personal data. The new uniform rules on MMFs should be applied in accordance with those rights and principles,

(a)

require authorisation as UCITS or are authorised as UCITS under Directive 2009/65/EC or are AIFs under Directive 2011/61/EU;

(b)

invest in short-term assets; and

(c)

have distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment.

(1)

‘short-term assets’ means financial assets with a residual maturity not exceeding 2 years;

(2)

‘money market instruments’ means money market instruments as defined in Article 2(1)(o) of Directive 2009/65/EC, and instruments as referred to in Article 3 of Commission Directive 2007/16/EC (15);

(3)

‘transferable securities’ means transferable securities as defined in Article 2(1)(n) of Directive 2009/65/EC, and instruments as referred to in Article 2(1) of Directive 2007/16/EC;

(4)

‘repurchase agreement’ means any agreement in which one party transfers securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified;

(5)

‘reverse repurchase agreement’ means any agreement in which one party receives securities, or any rights related to a title or security from a counterparty subject to a commitment to sell them back at a specified price on a future date specified or to be specified;

(6)

‘securities lending’ and ‘securities borrowing’ mean any transaction in which an institution or its counterparty transfers securities subject to a commitment that the borrower will return equivalent securities at some future date or when requested to do so by the transferor, that transaction being known as ‘securities lending’ for the institution transferring the securities and being known as ‘securities borrowing’ for the institution to which they are transferred;

(7)

‘securitisation’ means securitisation as defined in Article 4(1)(61) of Regulation (EU) No 575/2013;

(8)

‘mark-to-market’ means the valuation of positions at readily available close out prices that are sourced independently, including exchange prices, screen prices, or quotes from several independent reputable brokers;

(9)

‘mark-to-model’ means any valuation which is benchmarked, extrapolated or otherwise calculated from one or more market input;

(10)

‘amortised cost method’ means a valuation method which takes the acquisition cost of an asset and adjusts that value for amortisation of premiums or discounts until maturity;

(11)

‘public debt constant net asset value MMF’ or ‘public debt CNAV MMF’ means an MMF:

(12)

‘low volatility net asset value MMF’ or ‘LVNAV MMF’ means an MMF that complies with the specific requirements laid down in Articles 29, 30 and 32 and in Article 33(2)(b);

(13)

‘variable net asset value MMF’ or ‘VNAV MMF’ means an MMF that complies with the specific requirements laid down in Articles 29 and 30 and in Article 33(1);

(14)

‘short-term MMF’ means an MMF that invests in eligible money market instruments referred to in Article 10(1) and is subject to the portfolio rules set out in Article 24;

(15)

‘standard MMF’ means an MMF that invests in eligible money market instruments referred to in Article 10(1) and (2) and is subject to the portfolio rules set out in Article 25;

(16)

‘credit institution’ means credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013;

(17)

‘competent authority of the MMF’ means:

(18)

‘legal maturity’ means the date when the principal of a security is to be repaid in full and which is not subject to any optionality;

(19)

‘weighted average maturity’ or ‘WAM’ means the average length of time to legal maturity or, if shorter, to the next interest rate reset to a money market rate, of all of the underlying assets in the MMF reflecting the relative holdings in each asset;

(20)

‘weighted average life’ or ‘WAL’ means the average length of time to legal maturity of all of the underlying assets in the MMF reflecting the relative holdings in each asset;

(21)

‘residual maturity’ means the length of time remaining until the legal maturity of a security;

(22)

‘short sale’ means any sale by an MMF of an instrument which the MMF does not own at the time of entering into the agreement to sell, including such sale where, at the time of entering into the agreement to sell, the MMF has borrowed or agreed to borrow the instrument for delivery at settlement, not including:

(23)

‘manager of an MMF’ means, in the case of an MMF that is a UCITS, the UCITS management company, or the UCITS investment company in the case of a self-managed UCITS, and, in the case of an MMF that is an AIF, an AIFM or an internally-managed AIF.

(a)

a VNAV MMF;

(b)

a public debt CNAV MMF;

(c)

a LVNAV MMF.

(a)

the fund rules or instruments of incorporation of the MMF, including an indication of which type of MMF it is from those set out in Article 3(1);

(b)

identification of the manager of the MMF;

(c)

identification of the depositary;

(d)

a description of, or any information on, the MMF available to investors;

(e)

a description of, or any information on, the arrangements and procedures needed to comply with the requirements referred to in Chapters II to VII;

(f)

any other information or document requested by the competent authority of the MMF to verify compliance with the requirements of this Regulation.

(a)

the written agreement with the depositary;

(b)

information on delegation arrangements regarding portfolio and risk management and administration with regard to the AIF;

(c)

information about the investment strategies, the risk profile and other characteristics of MMFs that are AIFs that the AIFM manages or intends to manage.

(a)

the AIFM does not comply with this Regulation;

(b)

the AIFM does not comply with Directive 2011/61/EU;

(c)

the AIFM is not authorised by its competent authority to manage MMFs;

(d)

the AIFM has not provided the documentation referred to in paragraph 2.

(a)

money market instruments including financial instruments issued or guaranteed separately or jointly by the Union, the national, regional and local administrations of the Member States or their central banks, the European Central Bank, the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility, a central authority or central bank of a third country, the International Monetary Fund, the International Bank for Reconstruction and Development, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the Bank for International Settlements or any other relevant international financial institution or organisation to which one or more Member States belong;

(b)

eligible securitisations and asset-backed commercial paper (ABCPs);

(c)

deposits with credit institutions;

(d)

financial derivative instruments;

(e)

repurchase agreements that fulfil the conditions set out in Article 14;

(f)

reverse repurchase agreements that fulfil the conditions set out in Article 15;

(g)

units or shares of other MMFs.

(a)

investing in assets other than those referred to in paragraph 1;

(b)

short sale of any of the following instruments: money market instruments, securitisations, ABCPs and units or shares of other MMFs;

(c)

taking direct or indirect exposure to equity or commodities, including via derivatives, certificates representing them, indices based on them, or any other means or instrument that would give an exposure to them;

(d)

entering into securities lending agreements or securities borrowing agreements, or any other agreement that would encumber the assets of the MMF;

(e)

borrowing and lending cash.

(a)

it falls within one of the categories of money market instruments referred to in point (a), (b), (c) or (h) of Article 50(1) of Directive 2009/65/EC;

(b)

it displays one of the following alternative characteristics:

(c)

the issuer of the money market instrument and the quality of the money market instrument have received a favourable assessment pursuant to Articles 19 to 22;

(d)

where an MMF invests in a securitisation or ABCP, it is subject to the requirements laid down in Article 11.

(a)

a securitisation referred to in Article 13 of Commission Delegated Regulation (EU) 2015/61 (16);

(b)

an ABCP issued by an ABCP programme which:

(c)

a simple, transparent and standardised (STS) securitisation or ABCP.

(a)

the legal maturity at issuance of the securitisations referred to in point (a) of paragraph 1 is 2 years or less and the time remaining until the next interest rate reset date is 397 days or less;

(b)

the legal maturity at issuance or residual maturity of the securitisations or ABCPs referred to in points (b) and (c) of paragraph 1 is 397 days or less;

(c)

the securitisations referred to in points (a) and (c) of paragraph 1 are amortising instruments and have a WAL of 2 years or less.

(a)

the legal maturity at issuance or residual maturity of the securitisations and ABCPs referred to in points (a), (b) and (c) of paragraph 1 is 2 years or less and the time remaining until the next interest rate reset date is 397 days or less;

(b)

the securitisations referred to in points (a) and (c) of paragraph 1 are amortising instruments and have a WAL of 2 years or less.

(a)

requirements relating to the simplicity of the securitisation, including its true sale character and the respect of standards relating to the underwriting of the exposures;

(b)

requirements relating to standardisation of the securitisation, including risk retention requirements;

(c)

requirements relating to the transparency of the securitisation, including the provision of information to potential investors;

(d)

for ABCPs, in addition to points (a), (b) and (c), requirements relating to the sponsor and to the sponsor support of the ABCP programme.

(a)

the deposit is repayable on demand or is able to be withdrawn at any time;

(b)

the deposit matures in no more than 12 months;

(c)

the credit institution has its registered office in a Member State or, where the credit institution has its registered office in a third country, it is subject to prudential rules considered equivalent to those laid down in Union law in accordance with the procedure laid down in Article 107(4) of Regulation (EU) No 575/2013.

(a)

the underlying of the derivative instrument consists of interest rates, foreign exchange rates, currencies or indices representing one of those categories;

(b)

the derivative instrument serves only the purpose of hedging the interest rate or exchange rate risks inherent in other investments of the MMF;

(c)

the counterparties to OTC derivative transactions are institutions subject to prudential regulation and supervision and belonging to the categories approved by the competent authority of the MMF;

(d)

the OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the MMF’s initiative.

(a)

it is used on a temporary basis, for no more than seven working days, only for liquidity management purposes and not for investment purposes other than as referred to in point (c);

(b)

the counterparty receiving assets transferred by the MMF as collateral under the repurchase agreement is prohibited from selling, investing, pledging or otherwise transferring those assets without the MMF’s prior consent;

(c)

the cash received by the MMF as part of the repurchase agreement is able to be:

(d)

the cash received by the MMF as part of the repurchase agreement does not exceed 10 % of its assets;

(e)

the MMF has the right to terminate the agreement at any time upon giving prior notice of no more than two working days.

(a)

the MMF has the right to terminate the agreement at any time upon giving prior notice of no more than two working days;

(b)

the market value of the assets received as part of the reverse repurchase agreement is at all times at least equal to the value of the cash paid out.

(a)

they are issued or guaranteed by the Union, a central authority or central bank of a Member State, the European Central Bank, the European Investment Bank, the European Stability Mechanism or the European Financial Stability Facility provided that a favourable assessment has been received pursuant to Articles 19 to 22;

(b)

they are issued or guaranteed by a central authority or central bank of a third country, provided that a favourable assessment has been received pursuant to Articles 19 to 22.

(a)

no more than 10 % of the assets of the targeted MMF are able, according to its fund rules or instruments of incorporation, to be invested in aggregate in units or shares of other MMFs;

(b)

the targeted MMF does not hold units or shares in the acquiring MMF.

(a)

the targeted MMF is authorised under this Regulation;

(b)

where the targeted MMF is managed, whether directly or under a delegation, by the same manager as that of the acquiring MMF or by any other company to which the manager of the acquiring MMF is linked by common management or control, or by a substantial direct or indirect holding, the manager of the targeted MMF, or that other company, is prohibited from charging subscription or redemption fees on account of the investment by the acquiring MMF in the units or shares of the targeted MMF;

(c)

where an MMF invests 10 % or more of its assets in units or shares of other MMFs:

(a)

the MMF is marketed solely through an employee savings scheme governed by national law and which has only natural persons as investors;

(b)

the employee savings scheme referred to in point (a) only allows investors to redeem their investment subject to restrictive redemption terms which are laid down in national law, whereby redemptions may only take place in certain circumstances that are not linked to market developments.

(a)

the MMF is marketed solely through an employee savings scheme governed by national law and which has only natural persons as investors;

(b)

the employee savings scheme referred to in point (a) only allows investors to redeem their investment subject to restrictive redemption terms which are laid down in national law, whereby redemptions may only take place in certain circumstances that are not linked to market developments.

(a)

5 % of its assets in money market instruments, securitisations and ABCPs issued by the same body;

(b)

10 % of its assets in deposits made with the same credit institution, unless the structure of the banking sector in the Member State in which the MMF is domiciled is such that there are insufficient viable credit institutions to meet that diversification requirement and it is not economically feasible for the MMF to make deposits in another Member State, in which case up to 15 % of its assets may be deposited with the same credit institution.

(a)

investments in money market instruments, securitisations and ABCPs issued by that body;

(b)

deposits made with that body;

(c)

OTC financial derivative instruments giving counterparty risk exposure to that body.

(a)

the MMF holds money market instruments from at least six different issues by the issuer;

(b)

the MMF limits the investment in money market instruments from the same issue to a maximum of 30 % of its assets;

(c)

the MMF makes express reference, in its fund rules or instruments of incorporation, to all administrations, institutions or organisations referred to in the first subparagraph that issue or guarantee separately or jointly money market instruments in which it intends to invest more than 5 % of its assets;

(d)

the MMF includes a prominent statement in its prospectus and marketing communications drawing attention to the use of the derogation and indicating all administrations, institutions or organisations referred to in the first subparagraph that issue or guarantee separately or jointly money market instruments in which it intends to invest more than 5 % of its assets.

(a)

an effective process is to be established to obtain and update relevant information on the issuer and the instrument’s characteristics;

(b)

adequate measures are to be adopted and implemented to ensure that the internal credit quality assessment is based on a thorough analysis of the information that is available and pertinent, and includes all relevant driving factors that influence the creditworthiness of the issuer and the credit quality of the instrument;

(c)

the internal credit quality assessment procedure is to be monitored on an ongoing basis and all credit quality assessments shall be reviewed at least annually;

(d)

while there is to be no mechanistic over-reliance on external ratings in accordance with Article 5a of Regulation (EC) No 1060/2009, the manager of an MMF shall undertake a new credit quality assessment for a money market instrument, securitisations and ABCPs when there is a material change that could have an impact on the existing assessment of the instrument;

(e)

the credit quality assessment methodologies are to be reviewed at least annually by the manager of an MMF to determine whether they remain appropriate for the current portfolio and external conditions and the review shall be transmitted to the competent authority of the manager of the MMF. Where the manager of the MMF becomes aware of errors in the credit quality assessment methodology or in its application, it shall immediately correct those errors;

(f)

when methodologies, models or key assumptions used in the internal credit quality assessment procedure are changed, the manager of an MMF is to review all affected internal credit quality assessments as soon as possible.

(a)

the quantification of the credit risk of the issuer and of the relative risk of default of the issuer and of the instrument;

(b)

qualitative indicators on the issuer of the instrument, including in the light of the macroeconomic and financial market situation;

(c)

the short-term nature of money market instruments;

(d)

the asset class of the instrument;

(e)

the type of issuer distinguishing at least the following types of issuers: national, regional or local administrations, financial corporations, and non-financial corporations;

(f)

for structured financial instruments, the operational and counterparty risk inherent within the structured financial transaction and, in case of exposure to securitisations, the credit risk of the issuer, the structure of the securitisation and the credit risk of the underlying assets;

(g)

the liquidity profile of the instrument.

(a)

the design and operational details of its internal credit quality assessment procedure in a manner that allows competent authorities to understand and evaluate the appropriateness of a credit quality assessment;

(b)

the rationale for and the analysis supporting the credit quality assessment, as well as the manager of the MMF’s choice of criteria for, and the frequency of, the review of the credit quality assessment;

(c)

all major changes to the internal credit quality assessment procedure, including identification of the triggers of such changes;

(d)

the organisation of the internal credit quality assessment procedure and the internal control structure;

(e)

complete internal credit quality assessment histories on instruments, issuers and, where relevant, recognised guarantors;

(f)

the person or persons responsible for the internal credit quality assessment procedure.

(a)

the criteria for the validation of the credit quality assessment methodology, as referred to in Article 19(3);

(b)

the criteria for quantification of the credit risk, and of the relative risk of default of an issuer and of the instrument, as referred to in point (a) of Article 20(2);

(c)

the criteria for establishing qualitative indicators on the issuer of the instrument, as referred to in point (b) of Article 20(2);

(d)

the meaning of material change as referred to in point (d) of Article 19(4).

(a)

its portfolio is to have a WAM of no more than 60 days;

(b)

its portfolio is to have a WAL of no more than 120 days, subject to the second and third subparagraphs;

(c)

for LVNAV MMFs and public debt CNAV MMFs, at least 10 % of their assets are to be comprised of daily maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of one working day or cash which is able to be withdrawn by giving prior notice of one working day. A LVNAV MMF or public debt CNAV MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 10 % of its portfolio in daily maturing assets;

(d)

for a short-term VNAV MMF, at least 7,5 % of its assets are to be comprised of daily maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of one working day, or cash which is able to be withdrawn by giving prior notice of one working day. A short-term VNAV MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 7,5 % of its portfolio in daily maturing assets;

(e)

for LVNAV MMFs and public debt CNAV MMFs, at least 30 % of their assets are to be comprised of weekly maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of five working days or cash which is able to be withdrawn by giving prior notice of five working days. A LVNAV MMF or public debt CNAV MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 30 % of its portfolio in weekly maturing assets;

(f)

for a short-term VNAV MMF, at least 15 % of its assets are to be comprised of weekly maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of five working days, or cash which is able to be withdrawn by giving prior notice of five working days. A short-term VNAV MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 15 % of its portfolio in weekly maturing assets;

(g)

for the purpose of the calculation referred to in point (e), assets referred to in Article 17(7) which are highly liquid and can be redeemed and settled within one working day and have a residual maturity of up to 190 days may also be included within the weekly maturing assets of a LVNAV MMF and public debt CNAV MMF, up to a limit of 17,5 % of its assets;

(h)

for the purpose of the calculation referred to in point (f), money market instruments or units or shares of other MMFs may be included within the weekly maturing assets of a short-term VNAV MMF up to a limit of 7,5 % of its assets provided they are able to be redeemed and settled within five working days.

(i)

the put option is able to be freely exercised by the short-term MMF at its exercise date;

(ii)

the strike price of the put option remains close to the expected value of the instrument at the exercise date;

(iii)

the investment strategy of the short-term MMF implies that there is a high probability that the option will be exercised at the exercise date.

(i)

the contractual amortisation profile of such instruments;

(ii)

the amortisation profile of the underlying assets from which the cash-flows for the redemption of such instruments result.

(a)

its portfolio is to have at all times a WAM of no more than 6 months;

(b)

its portfolio is to have at all times a WAL of no more than 12 months, subject to the second and third subparagraphs;

(c)

at least 7,5 % of its assets are to be comprised of daily maturing assets, reverse repurchase agreements which can be terminated by giving prior notice of one working day or cash which can be withdrawn by giving prior notice of one working day. A standard MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 7,5 % of its portfolio in daily maturing assets;

(d)

at least 15 % of its assets are to be comprised of weekly maturing assets, reverse repurchase agreements which can be terminated by giving prior notice of five working days or cash which can be withdrawn by giving prior notice of five working days. A standard MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 15 % of its portfolio in weekly maturing assets;

(e)

for the purpose of the calculation referred to in point (d), money market instruments or units or shares of other MMFs may be included within the weekly maturing assets up to 7,5 % of its assets provided they are able to be redeemed and settled within five working days.

(i)

the put option is able to be freely exercised by the standard MMF at its exercise date;

(ii)

the strike price of the put option remains close to the expected value of the instrument at the exercise date;

(iii)

the investment strategy of the standard MMF implies that there is a high probability that the option will be exercised at the exercise date.

(i)

the contractual amortisation profile of such instruments;

(ii)

the amortisation profile of the underlying assets from which the cash-flows for the redemption of such instruments result.

(a)

identifiable patterns in investor cash needs, including the cyclical evolution of the number of shares in the MMF;

(b)

the risk aversion of the different investors;

(c)

the degree of correlation or close links between different investors in the MMF.

(a)

hypothetical changes in the level of liquidity of the assets held in the portfolio of the MMF;

(b)

hypothetical changes in the level of credit risk of the assets held in the portfolio of the MMF, including credit events and rating events;

(c)

hypothetical movements of the interest rates and exchange rates;

(d)

hypothetical levels of redemption;

(e)

hypothetical widening or narrowing of spreads among indices to which interest rates of portfolio securities are tied;

(f)

hypothetical macro systemic shocks affecting the economy as a whole.

(a)

the asset of an MMF shall be valued at the more prudent side of bid and offer unless the asset can be closed out at mid-market;

(b)

only good quality market data shall be used; such data shall be assessed on the basis of all of the following factors:

(a)

the volume and turnover in the market of that asset;

(b)

the issue size and the portion of the issue that the MMF plans to buy or sell;

(c)

market risk, interest rate risk, credit risk attached to the asset.

(a)

the units or shares of a public debt CNAV MMF may be issued or redeemed at a price that is equal to that MMF’s constant NAV per unit or share;

(b)

the units or shares of a LVNAV MMF may be issued or redeemed at a price that is equal to that MMF’s constant NAV per unit or share, but only where the constant NAV per unit or share calculated in accordance with Article 32(1), (2) and (3) does not deviate from the NAV per unit or share calculated in accordance with Article 30 by more than 20 basis points.

(a)

whenever the proportion of weekly maturing assets as set out in point (e) of Article 24(1) falls below 30 % of the total assets of the public debt CNAV MMF or of the LVNAV MMF and the net daily redemptions on a single working day exceed 10 % of total assets, the manager of the public debt CNAV MMF or of the LVNAV MMF shall immediately inform its board thereof and the board shall undertake a documented assessment of the situation to determine the appropriate course of action having regard to the interests of the investors and shall decide whether to apply one or more of the following measures:

(b)

whenever the proportion of weekly maturing assets as set out in point (e) of Article 24(1) falls below 10 % of its total assets, the manager of a public debt CNAV MMF or of a LVNAV MMF shall immediately inform its board thereof and the board shall undertake a documented assessment of the situation and, on the basis of such assessment and having regard to the interests of the investors, shall apply one or more of the following measures and document the reasons for its choice:

(a)

cash injections from a third party;

(b)

purchase by a third party of assets of the MMF at an inflated price;

(c)

purchase by a third party of units or shares of the MMF in order to provide liquidity to the fund;

(d)

issuance by a third party of any kind of explicit or implicit guarantee, warranty or letter of support for the benefit of the MMF;

(e)

any action by a third party the direct or indirect objective of which is to maintain the liquidity profile and the NAV per unit or share of the MMF.

(a)

the maturity breakdown of the portfolio of the MMF;

(b)

the credit profile of the MMF;

(c)

the WAM and WAL of the MMF;

(d)

details of the 10 largest holdings in the MMF, including the name, country, maturity and asset type, and the counterparty in the case of repurchase and reverse repurchase agreements;

(e)

the total value of the assets of the MMF;

(f)

the net yield of the MMF.

(a)

that the MMF is not a guaranteed investment;

(b)

that an investment in MMFs is different from an investment in deposits, with particular reference to the risk that the principal invested in an MMF is capable of fluctuation;

(c)

that the MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share;

(d)

that the risk of loss of the principal is to be borne by the investor.

(a)

the type and characteristics of the MMF;

(b)

portfolio indicators such as the total value of assets, NAV, WAM, WAL, maturity breakdown, liquidity and yield;

(c)

the results of stress tests and, where applicable, the proposed action plan;

(d)

information on the assets held in the portfolio of the MMF, including:

(e)

information on the liabilities of the MMF, including:

(a)

every event in which the price of an asset valued by using the amortised 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;

(b)

every event in which 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;

(c)

every event in which 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).

(a)

request access to any document in any form, and to receive or take a copy thereof;

(b)

require an MMF or the manager of an MMF to provide information without delay;

(c)

require information from any person related to the activities of an MMF or the manager of an MMF;

(d)

carry out on-site inspections with or without prior announcement;

(e)

take appropriate measures to ensure that an MMF or the manager of an MMF continues to comply with this Regulation;

(f)

issue an order to ensure that an MMF or the manager of an MMF complies with this Regulation and desists from a repetition of any conduct that could infringe this Regulation.

(a)

fails to comply with any of the requirements regarding asset composition, in infringement of Articles 9 to 16;

(b)

fails to comply with any of the portfolio requirements, in infringement of Article 17, 18, 24 or 25;

(c)

has obtained authorisation through false statements or any other irregular means, in infringement of Article 4 or 5;

(d)

uses the designation ‘money market fund’, ‘MMF’ or of another designation that suggests that a UCITS or AIF is an MMF, in infringement of Article 6;

(e)

fails to comply with any of the requirements regarding the internal credit quality assessment, in infringement of Article 19 or 20;

(f)

fails to comply with any of the governance, documentation or transparency requirements, in infringement of Article 21, 23, 26, 27, 28 or 36;

(g)

fails to comply with any of the requirements regarding valuation, in infringement of Article 29, 30, 31, 32, 33 or 34.

(a)

take measures to ensure that the MMF or the manager of an MMF concerned complies with the relevant provisions;

(b)

withdraw an authorisation granted in accordance with Article 4 or 5.

(a)

analyse the experience acquired in applying this Regulation, the impact on investors, MMFs and the managers of MMFs in the Union;

(b)

assess the role that MMFs play in purchasing debt issued or guaranteed by the Member States;

(c)

take into account the specific characteristics of the debt issued or guaranteed by the Member States and the role that the debt plays in financing the Member States;

(d)

take into account the report referred to in Article 509(3) of Regulation (EU) No 575/2013;

(e)

take into account the impact of this Regulation on the short-term financing markets;

(f)

take into account the regulatory developments at international level.