In May 2010, the Committee of European Securities Regulators (CESR) adopted guidelines on a Common Definition of European Money Market Funds (the CESR guidelines). The CESR guidelines entered into force on 1 July 2011. The CESR guidelines distinguish between Short-Term Money Market Funds (ST MMFs) and Money Market Funds (MMFs) on the basis of certain key characteristics, such as the weighted average maturity and weighted average life. The CESR guidelines also set out criteria that money market instruments should respect in order to be considered as eligible investments for ST MMFs and MMFs.

Following a review the European Securities and Markets Authority (ESMA) (CESR’s successor authority) concluded that the CESR guidelines had the potential to trigger sole or mechanistic reliance on credit ratings. Following further review the European Supervisory Authorities published a report on 6 February 2014 entitled Mechanistic Reference to Credit Ratings in the ESA’s Guidelines and Recommendations (the Report).

ESMA has now published an opinion on how national competent authorities should apply the modifications set out in the Report when monitoring the application of the CESR guidelines by financial market participants.  ESMA states that it is not re-issuing the CESR guidelines as ESMA guidelines. This means that national competent authorities will not have to notify ESMA whether or not they comply or intend to comply with the amended version of the CESR guidelines. However, ESMA will monitor the application of this opinion by national competent authorities.

View ESMA publishes an opinion on the application of guidelines on Money Market Funds, 22 August 2014