Collective investment undertakings complying with all the following shall be treated as MMFs, where they:
pursue the investment objective of maintaining a fund’s principal and providing a return in line with the interest rates of money market instruments;
invest in money market instruments which comply with the criteria for money market instruments set out in Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)(1), or deposits with credit institutions or, alternatively, ensure that the liquidity and valuation of the portfolio in which they invest is assessed on an equivalent basis;
ensure that the money market instruments they invest in are of high quality, as determined by the management company. The quality of a money market instrument shall be considered, inter alia, on the basis of the following factors:
the credit quality of the money market instrument;
the nature of the asset class represented by the money market instrument;
for structured financial instruments, the operational and counterparty risk inherent within the structured financial transaction;
the liquidity profile;
ensure that their portfolio has a weighted average maturity (WAM) of no more than six months and a weighted average life (WAL) of no more than 12 months (in accordance with Annex I, Part 1, Section 2);
provide daily net asset value (NAV) and a price calculation of their shares/units, and daily subscription and redemption of shares/units;
limit investment in securities to those with a residual maturity until the legal redemption date of less than or equal to two years, provided that the time remaining until the next interest rate reset date is less than or equal to 397 days whereby floating rate securities should reset to a money market rate or index;
limit investment in other collective investment undertakings to those complying with the definition of MMFs;
do not take direct or indirect exposure to equity or commodities, including via derivatives and only use derivatives in line with the money market investment strategy of the fund. Derivatives which give exposure to foreign exchange may only be used for hedging purposes. Investment in non-base currency securities is allowed provided the currency exposure is fully hedged;
have either a constant or fluctuating NAV.