Article 15(7) of the Money Market Funds Regulation (MMF Regulation) empowers the European Commission (Commission) to adopt delegated acts specifying the liquidity and credit quality requirements applicable to assets received as part of a reverse repurchase agreement.

Article 22 of the MMF Regulation empowers the Commission to adopt a delegated act specifying:

  • the criteria for the validation of the credit quality assessment methodologies referred to in Article 17 of the MMF Regulation;
  • the meaning of “material change” that could have an impact on the existing assessment of the instrument and that would trigger a new credit quality assessment for a money market instrument;
  • the criteria for quantification of the credit risk and the relative risk of default of an issuer and of the instrument in which the MMF invests; and
  • the criteria to establish qualitative indicators on the issuer of the instrument.

Article 37 of the MMF Regulation provides that the European Securities and Markets Authority (ESMA) shall develop draft implementing technical standards (ITS) to establish a reporting template containing all the information managers of MMFs are required to send to the Member State competent authority (NCA) of the MMF.

Article 28 of the MMF Regulation provides that ESMA shall develop guidelines with a view to establishing common reference parameters of the stress test scenarios to be included in the stress tests managers of MMFs are required to conduct.

ESMA has now published a final report containing its technical advice, draft ITS and guidelines under the MMF Regulation.

The technical advice and ITS have been submitted to the Commission for endorsement.

With respect to the ITS on the establishment of a reporting template and the timing of implementation of the corresponding data base, ESMA confirms that managers would need to send their first quarterly reports mentioned in Article 37 to NCAs in October / November 2019. In addition, there will be no requirements to retroactively provide historical data for any period prior to this starting date of the reporting. In terms of next steps, ESMA will start working on the guidelines and information technology (IT) guidance that will complement the information included in the ITS so that managers of MMFs have all the necessary information to fill in the reporting template they will send to the NCA of their MMF, as specified in Article 37 of the MMF Regulation.

With respect to the guidelines on stress tests, ESMA determined that in addition to those stress tests managers of MMFs will conduct, managers of MMFs should also conduct common reference stress test scenarios. The guidelines will also be updated accordingly. The timing of publication of the update of the guidelines on stress tests will be the same as the guidelines and IT guidance that will complement the information included in the ITS.

View ESMA final report on MMF Regulation, 17 November 2017