On 20 November 2020, the International Organisation of Securities Commissions (IOSCO) published a diagnostic report analysing the events that occurred in the money market funds (MMFs) sector during the market turmoil in March 2020. At the same time, IOSCO has also published a thematic review assessing the implementation of selected IOSCO recommendations issued in 2012 to strengthen the resilience of MMFs globally.
The diagnostic report notes that the March market turmoil highlighted continuing vulnerabilities in certain types of non-public MMFs and the need for further reform. The diagnostic report highlights areas that merit further consideration, such as the broader ecosystem and the functioning of the money markets, the behaviour of MMF investors and elements of regulatory frameworks that may have played a role in accelerating flows out of certain types of non-public MMFs.
The thematic review found that participating jurisdictions have generally implemented MMF reforms in line with the 2012 IOSCO policy recommendations for MMFs, taking into account the heterogeneity and specificities of their local MMF markets. Liquidity requirements in most of the assessed jurisdictions are in line with the recommendations for MMFs to hold a minimum amount of liquid assets with some variation on the type of eligible assets and amount. All jurisdictions (except for very limited types of funds in one jurisdiction) systematically require the use of stress tests. In line with the 2012 recommendations, all assessed jurisdictions allow for the use of certain liquidity management tools and require specific pre- or post- sale disclosures to investors regarding the use of these tools.