On 7 January 2025, the European Securities and Markets Authority (ESMA) published a Final Report containing guidelines on stress test scenarios under the Money Market Funds Regulation (MMF Regulation).

Article 28(7) 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 that Money Market Funds (MMFs) or managers of MMFs are required to conduct. These guidelines are updated at least every year taking into account the latest market developments. ESMA published the last update of these guidelines on 19 December 2023 and their translation into EU official languages occurred on 6 March 2024 (2023 Guidelines).

The guidelines in the Final Report are the latest version (2024 Guidelines) and compared to the 2023 Guidelines include:

  • An additional explanation on the way to report the results of macro systemic shocks (section 4.8 of the 2024 Guidelines).
  • Updated guidelines and risk parameters, so that managers of MMFs have the information needed to fill in the reporting template mentioned in Article 37 of the MMF Regulation (section 5 of the 2024 Guidelines).

The remainder of the 2024 Guidelines are largely unchanged when compared to the 2023 Guidelines.

ESRB

The European Systemic Risk Board has also published the adverse scenario for the 2024 Guidelines (dated 3 December 2024).

Next steps

The 2024 Guidelines will be translated into the official EU languages and published on ESMA’s website.

The publication of the translations will trigger a two-month period during which Member State competent authorities (NCAs) must notify ESMA whether they comply or intend to comply with the 2024 Guidelines.

The 2024 Guidelines, including the new 2024 parameters, will apply 2 months after the publication of the translations.

After the start of application, managers will have to report the results of the new parameters to NCAs with their quarterly reports, for the purpose of the reporting referred to in Article 37 of the MMF Regulation and set out in Commission Implementing Regulation (EU) 2018/7083. Until then, managers should use the parameters set in the 2023 Guidelines and report the results accordingly.