The Money Markets Funds (MMF) Regulation came into force on 21 July 2017. The Regulation will apply to new MMFs from 21 July 2018 and to existing MMFs from 21 January 2019. Although the MMF Regulation is directly applicable under EU law, the FCA needs to make certain amendments to its Handbook to ensure consistency with the Regulation.
To this end, the FCA has now published Consultation Paper 18/4: The European Money Market Funds (MMF) Regulation (CP18/4). In CP18/4 the FCA proposes to make amendments to the Collective Investment Schemes sourcebook (COLL) including:
- deleting COLL 5.9 which deals with the investment powers of MMFs, and other provisions in COLL that are superseded by the requirements of the Regulation (for example the MMF’s transparency requirements);
- dis-applying certain provisions in COLL 5.2, 5.6 and 8.4 on the basis that they are no longer required;
- amending provisions in COLL 5, 6, 7 and 8 which are being overridden by, or require modification to be consistent with the MMF Regulation;
- amending COLL 6.3.8 to reflect Articles 33 and 34 of the MMF Regulation, which appear to allow for dilution levies as defined in the Handbook, but not dilution adjustments; and
- amending COLL 6.6 and 8.5 to ensure that the obligations that currently apply to depositories of authorised funds continue to apply to them in the same way, once the MMF Regulation takes effect.
The FCA also states that it proposes to leave unchanged the references to ‘qualifying money market fund’ in CASS 7.13 and in COLL to reflect its implementation of MiFID II and MiFIR.
The regulator also states that it proposes to retain the definition of ‘designated money market fund’ in BIPRU 12 on the basis that if this definition was aligned to the MMF Regulation definition of ‘money market fund’ there would be a corresponding impact on the liquidity requirements for firms.
The deadline for comments on CP18/4 is 23 March 2018.
View CP18/4: The European Money Market Funds Regulation, 24 January 2018