The European Parliament has announced that it has voted in plenary session to adopt the proposed Regulation on Money Market Funds (MMF Regulation). A provisional edition of the adopted text has also been published.

The European Parliament proposed a new category of money market fund (MMF) – the Low Volatility Net Asset Value MMF (LVNAV MMF) designed specifically to work for small firms in the real economy.

The key features of the LVNAV MMF include:

  • a diversified portfolio with stringent concentration requirements to reduce risk, assets described more precisely and subject to strict conditions;
  • only limited use of the amortised accounting method to value assets;
  • strict daily and weekly liquidity requirements to fulfil potential redemption requests; and
  • improved transparency, to ensure that investors and supervisors get better and earlier information.

LVNAV MMFs should only be authorised for a period of five years. The European Commission will assess whether these rules are fit for purpose four years after they enter into force and propose whether LVNAV MMFs should be authorised further or indefinitely.

The next step is for the MMF Regulation to be adopted by the Council of the EU.

View European Parliament adopts MMF Regulation, 5 April 2017

View Provisional edition of the adopted texts on Money Market Funds Regulation, 5 April 2017

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