Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32) (repealed) (c. 25)

ANNEX I MONETARY FINANCIAL INSTITUTIONS AND STATISTICAL REPORTING REQUIREMENTS

PART 1 Identification of certain MFIs

Section 1: Identification of certain MFIs based on principles of substitutability of deposits

1.1. Financial institutions other than credit institutions which issue financial instruments that are considered close substitutes for deposits are classified as MFIs provided that they meet the MFI definition in other respects. The classification is based on the criteria of substitutability of deposits (i.e. whether liabilities are classified as deposits) which is determined by their liquidity, combining characteristics of transferability, convertibility, certainty and marketability, and having regard, where appropriate, to their term of issue.

These criteria for the substitutability of deposits are also applied to determine whether liabilities should be classified as deposits, unless there is a separate category for such liabilities.

1.2. For the purposes both of determining substitutability of deposits and classifying liabilities as deposits:

• transferability refers to the possibility of mobilising funds placed in a financial instrument by using payment facilities, such as cheques, transfer orders, direct debits or similar means,

• convertibility refers to the possibility and the cost of converting financial instruments into currency or transferable deposits; the loss of fiscal advantages in the case of such conversion may be considered a penalty that reduces the degree of liquidity,

• certainty means knowing precisely in advance the capital value of a financial instrument in terms of national currency, and

• securities quoted and traded regularly on an organised market are considered to be marketable. For shares in open-end collective investment undertakings, there is no market in the usual sense. Nevertheless, investors know the daily quotation of the shares and can withdraw funds at this price.

Section 2: Principles for identification of MMFs

2.1. MMFs are defined as those collective investment undertakings (CIUs) the shares/units of which are, in terms of liquidity, close substitutes for deposits and which primarily invest in money market instruments and/or in MMF shares/units and/or in other transferable debt instruments with a residual maturity of up to and including one year, and/or in bank deposits, and/or which pursue a rate of return that approaches the interest rates of money market instruments. The criteria applied in order to identify MMFs are derived from the public prospectus as well as fund rules, instruments of incorporation, established statutes or by-laws, subscription documents or investment contracts, marketing documents, or any other statement with similar effects, of the CIUs.

The MMF itself or the person legally representing it ensures the provision of any information required to meet its statistical reporting requirements. Where necessary for practical reasons, the data may be effectively submitted by any of the entities that act in the context of financial activities involving MMF shares/units, such as depositories.

2.2. For the purpose of defining MMFs:

• ‘CIUs’ means undertakings the sole object of which is the collective investment of capital raised from the public and the units of which are, at the request of the holders, repurchased or redeemed directly or indirectly out of the undertaking's assets. Such undertakings may be constituted according to law, either under the law of contract (as common funds managed by management companies), or trust law (as unit trusts), or under company law (as investment companies),

• ‘bank deposits’ means cash deposits made with credit institutions, repayable on demand or upon prior notice of up to three months, or at agreed maturities of up to two years, inclusive of sums paid to credit institutions in respect of a transfer of securities under repurchase agreements and securities lending,

• ‘close substitutability for deposits in terms of liquidity’ means the ability of units of CIUs, under normal market circumstances, to be repurchased, redeemed or transferred, at the request of the holder, where the liquidity of the units is comparable to the liquidity of deposits,

• ‘primarily’ means at least 85 % of the investment portfolio,

• ‘money market instruments’ means those classes of transferable debt instruments which are normally traded on the money market (for example, certificates of deposit, commercial paper and banker's acceptances, treasury and local authority bills) because of the following features:

  (a)

  liquidity, where they can be repurchased, redeemed or sold at limited cost, in terms of low fees and narrow bid/offer spread, and with very short settlement delay; and

  (b)

  market depth, where they are traded on a market which is able to absorb a large volume of transactions, with such trading of large amounts having a limited impact on their price; and

  (c)

  certainty in value, where their value can be accurately determined at any time or at least once a month; and

  (d)

  low interest risk, where they have a residual maturity of up to and including one year, or regular yield adjustments in line with money market conditions at least every 12 months; and

  (e)

  low credit risk, where such instruments are either:

  (1)

  admitted to an official listing on a stock exchange or traded on other regulated markets which operate regularly, are recognised and are open to the public; or

  (2)

  issued under regulations aimed at protecting investors and savings; or

  (3)

  issued by:

  • a central, regional or local authority, a central bank of a Member State, the EU, the ECB, the European Investment Bank, a non-Member State or, if the latter is a federal State, by one of the members making up the federation, or by a public international body to which one or more Member States belong,

    or

  • an establishment subject to prudential supervision in accordance with criteria defined by Community law, or by an establishment which is subject to and complies with prudential rules considered by the competent authorities to be at least as stringent as those laid down by Community law, or guaranteed by any such establishment,

    or

  • an undertaking the securities of which have been admitted to an official listing on a stock exchange or are traded on other regulated markets which operate regularly, are recognised and are open to the public.