Regulation (EU) 2017/1131 of the European Parliament and of the CouncilShow full title

Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (Text with EEA relevance)

CHAPTER IU.K.General provisions

Article 1U.K.Subject matter and scope

1.This Regulation lays down rules for money market funds (MMFs) established, managed or marketed in the [F1United Kingdom], concerning the financial instruments eligible for investment by a MMF, the portfolio of an MMF, the valuation of the assets of an MMF, and the reporting requirements in relation to an MMF.

This Regulation applies to collective investment undertakings that:

[F2(a)require authorisation as UCITS or are authorised as UCITS under section 243 or 261D of FSMA M1 or regulation 14 of the OEIC Regulations M2; or are AIFs;]

(b)invest in short-term assets; and

(c)have distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment.

F32.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Article 2U.K.Definitions

For the purposes of this Regulation, the following definitions apply:

(1)

‘short-term assets’ means financial assets with a residual maturity not exceeding 2 years;

(2)

[F4‘money market instruments’ means instruments normally dealt in on the money market which—

(a)

are liquid;

(b)

have a value which can be accurately determined at any time; and

(c)

satisfy the conditions set out in Article 2a(1);]

(3)

[F5‘transferable securities’ means instruments in the following categories which satisfy the conditions set out in Article 2a(4)—

(a)

shares in companies and other securities equivalent to shares in companies;

(b)

bonds and other forms of securitised debt; or

(c)

any other negotiable securities which carry the right to acquire securities referred to in subparagraph (a) or (b) by subscription or exchange;]

(4)

‘repurchase agreement’ means any agreement in which one party transfers securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified;

(5)

‘reverse repurchase agreement’ means any agreement in which one party receives securities, or any rights related to a title or security from a counterparty subject to a commitment to sell them back at a specified price on a future date specified or to be specified;

(6)

‘securities lending’ and ‘securities borrowing’ mean any transaction in which an institution or its counterparty transfers securities subject to a commitment that the borrower will return equivalent securities at some future date or when requested to do so by the transferor, that transaction being known as ‘securities lending’ for the institution transferring the securities and being known as ‘securities borrowing’ for the institution to which they are transferred;

(7)

‘securitisation’ means securitisation as defined in Article 4(1)(61) of Regulation (EU) No 575/2013;

(8)

‘mark-to-market’ means the valuation of positions at readily available close out prices that are sourced independently, including exchange prices, screen prices, or quotes from several independent reputable brokers;

(9)

‘mark-to-model’ means any valuation which is benchmarked, extrapolated or otherwise calculated from one or more market input;

(10)

‘amortised cost method’ means a valuation method which takes the acquisition cost of an asset and adjusts that value for amortisation of premiums or discounts until maturity;

(11)

‘public debt constant net asset value MMF’ or ‘public debt CNAV MMF’ means an MMF:

(a)

that seeks to maintain an unchanging net asset value (NAV) per unit or share;

(b)

where the income in the fund is accrued daily and can either be paid out to the investor or used to purchase more units or shares in the fund;

(c)

where assets are generally valued according to the amortised cost method and where the NAV is rounded to the nearest percentage point or its equivalent in currency terms; and

(d)

that invests at least 99,5 % of its assets in instruments referred to in Article 17(7), reverse repurchase agreements secured with government debt referred to in Article 17(7) and in cash;

(12)

‘low volatility net asset value MMF’ or ‘LVNAV MMF’ means an MMF that complies with the specific requirements laid down in Articles 29, 30 and 32 and in Article 33(2)(b);

(13)

‘variable net asset value MMF’ or ‘VNAV MMF’ means an MMF that complies with the specific requirements laid down in Articles 29 and 30 and in Article 33(1);

(14)

‘short-term MMF’ means an MMF that invests in eligible money market instruments referred to in Article 10(1) and is subject to the portfolio rules set out in Article 24;

(15)

‘standard MMF’ means an MMF that invests in eligible money market instruments referred to in Article 10(1) and (2) and is subject to the portfolio rules set out in Article 25;

(16)

‘credit institution’ means credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013;

(17)

‘competent authority of the MMF’ means:

(a)

for [F6EEA UCITS], the competent authority of the [F6EEA UCITS] home Member State designated in accordance with Article 97 of Directive 2009/65/EC;

(b)

for [F7EEA AIF]s, the competent authority of the home Member State of the AIF as defined in Article 4(1)(p) of Directive 2011/61/EU;

(c)

for [F8non-EEA AIF]s, any of the following:

(i)

the competent authority of the Member State where the [F8non-EEA AIF] is marketed in the Union without a passport;

(ii)

the competent authority of the EU AIFM managing the [F8non-EEA AIF], where the non-EU AIF is marketed in the Union with a passport or is not marketed in the Union;

(iii)

the competent authority of the Member State of reference if the [F8non-EEA AIF] is not managed by an EU AIFM and is marketed in the Union with a passport;

(18)

‘legal maturity’ means the date when the principal of a security is to be repaid in full and which is not subject to any optionality;

(19)

‘weighted average maturity’ or ‘WAM’ means the average length of time to legal maturity or, if shorter, to the next interest rate reset to a money market rate, of all of the underlying assets in the MMF reflecting the relative holdings in each asset;

(20)

‘weighted average life’ or ‘WAL’ means the average length of time to legal maturity of all of the underlying assets in the MMF reflecting the relative holdings in each asset;

(21)

‘residual maturity’ means the length of time remaining until the legal maturity of a security;

(22)

‘short sale’ means any sale by an MMF of an instrument which the MMF does not own at the time of entering into the agreement to sell, including such sale where, at the time of entering into the agreement to sell, the MMF has borrowed or agreed to borrow the instrument for delivery at settlement, not including:

(a)

a sale by either party under a repurchase agreement where one party has agreed to sell to the other a security at a specified price with a commitment from the other party to sell the security back at a later date at another specified price; or

(b)

an entry into a futures contract or other derivative contract where it is agreed to sell securities at a specified price at a future date;

(23)

[F9‘manager of an MMF’ means—

(a)

in the case of an MMF that is a UK UCITS—

(i)

if the UCITS is an investment company that has not designated a management company, the investment company; or

(ii)

in all other cases, the management company (as defined in section 237(2) of FSMA, as amended from time to time) for that UCITS;

(b)

in the case of an MMF that is an EEA UCITS treated as a recognised scheme under regulation 60 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019—

(i)

if the EEA UCITS has not designated an operator (as defined in section 237(2) of FSMA), the UCITS;

(ii)

in all other cases, the operator of the EEA UCITS;

(c)

in the case of an MMF that is an AIF, an AIFM or an internally managed AIF;]

(24)

[F10‘AIF’ has the meaning given in regulation 3 of the AIFM Regulations, as amended from time to time;

(25)

‘AIFM’, in relation to an AIF, has the meaning given in regulation 4(1) of the AIFM Regulations, as amended from time to time;

(26)

‘UK AIF’ and ‘EEA AIF’ have the meanings given in regulation 2(1) of the AIFM Regulations, as amended from time to time;

(27)

‘UCITS’ has the meaning given in section 236A of FSMA, as amended from time to time;

(28)

‘UK UCITS’ has the meaning given in section 237(3) of FSMA, as amended from time to time;

(29)

‘EEA UCITS’ means a UCITS which is authorised pursuant to Article 5 of Directive 2009/65/EC in an EEA State;

(30)

‘EU MMF’ means an AIF or UCITS which was authorised as an MMF under the EU MMF Regulation (as it had effect immediately before IP completion day) by the competent authority of a Member State other than the United Kingdom, and that authorisation has not been withdrawn or cancelled;

(31)

‘temporary marketing permission’ means—

(a)

for an EEA AIF, permission to market in the United Kingdom under regulation 78A(1) of the AIFM Regulations;

(b)

for an EEA UCITS, permission to market in the United Kingdom by virtue of Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (temporary authorisation in connection with temporary recognition);

(32)

‘Regulation (EU) 600/2014’ means Regulation (EU) 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;

(33)

‘EU MMF Regulation’ means Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds as it has effect in EU law;

(34)

‘Directive 2011/61/EU’ means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010;

(35)

‘Directive 2009/65/EC’ means 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”);

(36)

‘FSMA’ means the Financial Services and Markets Act 2000;

(37)

‘AIFM Regulations’ means the Alternative Investment Fund Managers Regulations 2013;

(38)

‘OEIC Regulations’ means the Open-Ended Investment Companies Regulations 2001;

(39)

‘FCA’ means the Financial Conduct Authority;

(40)

‘PRA’ means the Prudential Regulation Authority.

Any reference in this Regulation to a sourcebook is a reference to a sourcebook in the Handbook of Rules and Guidance published by the FCA under the FSMA as in force on IP completion day.]

Textual Amendments

[F11Article 2aU.K.Conditions for money market instruments and transferable securities

1.An instrument satisfies the conditions in this paragraph if it—

(a)is a financial instrument within paragraph 2, and

(b)satisfies one of the criteria in paragraph 3.

2.A financial instrument comes within this paragraph if it is—

(a)admitted to trading or dealt in on—

(i)a UK regulated market (within the meaning of Article 2(1)(13A) of Regulation (EU) 600/2014);

(ii)an EU regulated market (within the meaning of Article 2(1)(13B) of Regulation (EU) 600/2014 which operates regularly and is recognised and open to the public; or

(b)admitted to official listing on a stock exchange in a country other than the United Kingdom or a Member State;

(c)dealt in on a regulated market (within the meaning of Article 2(1)(13) of Regulation (EU) 600/2014) in a country other than the United Kingdom or a Member State which operates regularly and is recognised and open to the public provided that the choice of stock exchange or market has been approved by the FCA or is provided for in law or the fund rules or the instruments of incorporation of the investment company; or

(d)not admitted to trading.

3.An instrument satisfies one of the criteria in this paragraph if—

(a)it has a maturity at issuance of up to and including 397 days;

(b)it has a residual maturity of up to and including 397 days;

(c)it undergoes regular yield adjustments in line with money market conditions at least every 397 days; or

(d)its risk profile, including credit and interest rate risks, corresponds to that of financial instruments which have a maturity referred to in point (a) or (b), or are subject to a yield adjustment referred to in point (c).

4. Instruments satisfy the conditions in this paragraph if—

(a)the potential loss which a UCITS may incur with respect to holding those instruments is limited to the amount paid for them;

(b)their liquidity does not compromise the ability of a UCITS to comply with rule 6.2.16(3) of the Collective Investment Schemes sourcebook;

(c)reliable valuation is available for them—

(i)in the case of securities admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5, in the form of accurate, reliable and regular prices which are either market prices or prices made available by valuation systems independent from issuers;

(ii)in the case of other securities as referred to in paragraph 6 in the form of regular and accurate information to the UCITS on the security or, where relevant, on the portfolio of the security;

(d)appropriate information is available for them as follows—

(i)in the case of securities admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5, in the form of regular, accurate and comprehensive information to the market on the security or, where relevant, on the portfolio of the security;

(ii)in the case of other securities as referred to in paragraph 6, in the form of regular and accurate information to the UCITS on the security or, where relevant, on the portfolio of the security;

(e)they are negotiable;

(f)their acquisition is consistent with the investment objectives or the investment policy, or both, of the UCITS pursuant to the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement Directive 2009/65/EC;

(g)their risks are adequately captured by the risk management process of the UCITS.

5.A recently issued security satisfies the conditions in this paragraph if—

(a)the terms of issue include an undertaking that an application will be made for admission to official listing on a stock exchange or to another regulated market (within the meaning of Article 2(1)(13) of Regulation (EU) 600/2014) which operates regularly and is recognised and open to the public, provided that the choice of stock exchange or market has been approved by the FCA or is provided for in law or the fund rules or the instruments of incorporation of the investment company; and

(b)the admission referred to in point (a) is secured within a year of issue.

6.The securities referred to in this paragraph are—

(a)transferable securities or money market instruments which are not admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5;

(b)precious metals or certificates representing them;

(c)ancillary liquid assets.]

Textual Amendments

Article 3U.K.Types of MMFs

1.MMFs shall be set up as one of the following types:

(a)a VNAV MMF;

(b)a public debt CNAV MMF;

(c)a LVNAV MMF.

2.The authorisation of an MMF shall explicitly state the type of MMF, from those set out in paragraph 1.

Article 4U.K.Authorisation of MMFs

1.No collective investment undertaking shall be established, marketed or managed [F12in the United Kingdom as an MMF unless—

(a)it has been authorised by the FCA in accordance with this Regulation;

(b)it is an EU MMF with temporary marketing permission; or

(c)it is an EU MMF which satisfies the condition in paragraph 1A and—

(i)which is a recognised scheme under section 272 of FSMA; or

(ii)in relation to which the FCA has received written notification under regulation 57 (subject to paragraph 1C), 58 or 59 of the AIFM Regulations.]

F13...

[F141A.An EU MMF satisfies the condition in this paragraph if, immediately before the relevant date, it was—

(a)a recognised scheme under Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019; or

(b)marketed in the United Kingdom under Part 9A of the Alternative Investment Fund Managers Regulations 2013.

1B.For the purposes of paragraph 1A, the “relevant date” is the date on which—

(a)the EU MMF was declared to be a recognised scheme under section 272 of FSMA, or

(b)the FCA received the written notification referred to in paragraph 1(c)(ii).

1C.If an EU MMF was marketed in the United Kingdom by an EEA AIFM before IP completion day under regulation 57 of the AIFM Regulations, the AIFM must give notice to the FCA for the purposes of paragraph 1(c) under regulation 58 or 59 of those Regulations.]

[F152.The following requirements apply to unit trust schemes (within the meaning of section 237(1) of FSMA)—

(a)a unit trust scheme that applies for authorisation under section 243 of FSMA and under this Regulation for the first time must be authorised as a money market fund under section 243A of FSMA;

(b)a unit trust scheme that has already been authorised under section 243 of FSMA may apply to be authorised as a money market fund under section 243A of FSMA and in accordance with the procedure set out in paragraph 5 of this Article.

2A.The following rules apply to contractual schemes (within the meaning of section 235A(1) of FSMA)—

(a)a contractual scheme that applies for authorisation under section 261D of FSMA and under this Regulation for the first time must be authorised as a money market fund under section 261EA of FSMA;

(b)a contractual scheme that has already been authorised under section 261D of FSMA may apply to be authorised as a money market fund under section 261EA of FSMA and in accordance with the procedure set out in paragraph 5 of this Article.

2B.The following rules apply to open-ended investment companies (within the meaning of section 236(1) of FSMA—

(a)an open-ended investment company that applies for authorisation under regulation 14 of the OEIC Regulations and under this Regulation for the first time must be authorised as a money market fund under regulation 14(1A) of the OEIC Regulations;

(b)an open-ended investment company that has already been authorised under regulation 14 of the OEIC Regulations may apply to be authorised as a money market fund under regulation 14(1A) of the OEIC Regulations and in accordance with the procedure set out in paragraph 5 of this Article.]

3.A collective investment undertaking that is an AIF and that requires authorisation as an MMF under this Regulation shall be authorised as an MMF pursuant to the authorisation procedure laid down in Article 5.

4.No collective investment undertaking shall be authorised as an MMF unless the [F16FCA] is satisfied that the MMF will be able to meet all the requirements of this Regulation.

5.For the purposes of authorisation as an MMF, a collective investment undertaking shall submit to [F17the FCA] all of the following documents:

(a)the fund rules or instruments of incorporation of the MMF, including an indication of which type of MMF it is from those set out in Article 3(1);

(b)identification of the manager of the MMF;

(c)identification of the depositary;

(d)a description of, or any information on, the MMF available to investors;

(e)a description of, or any information on, the arrangements and procedures needed to comply with the requirements referred to in Chapters II to VII;

(f)any other information or document requested by the [F18FCA] of the MMF to verify compliance with the requirements of this Regulation.

F196.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.[F20The FCA] shall keep a central public register identifying each MMF authorised under this Regulation, its type in accordance with Article 3(1), whether it is a short-term or standard MMF, the manager of an MMF and the competent authority of the MMF. The register shall be made available in electronic format.

Textual Amendments

Article 5U.K.Procedure for authorising MMFs that are AIFs

1.An AIF shall be authorised as an MMF only if the [F21FCA] approves the application submitted by an AIFM, that has already been [F22given permission under Part 4A of FSMA] to manage an MMF that is an AIF, and also approves the fund rules and the choice of the depositary.

2.When submitting the application for managing an MMF that is an AIF, the authorised AIFM shall provide the [F23FCA] with:

(a)the written agreement with the depositary;

(b)information on delegation arrangements regarding portfolio and risk management and administration with regard to the AIF;

(c)information about the investment strategies, the risk profile and other characteristics of MMFs that are AIFs that the AIFM manages or intends to manage.

F24...

3.Any subsequent modifications of the documentation referred to in paragraph 2 shall be immediately notified to the [F25FCA] by the AIFM.

4.The [F26FCA] shall refuse the application of the AIFM only in the event that any of the following applies:

(a)the AIFM does not comply with this Regulation;

(b)the AIFM does not comply with [F27UK law on alternative investment fund managers];

(c)the AIFM is not authorised by [F28the FCA] to manage MMFs;

(d)the AIFM has not provided the documentation referred to in paragraph 2.

F29...

F305.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.Within 2 months of submission of a complete application, the AIFM shall be informed whether or not authorisation of the AIF as an MMF has been granted.

7.The [F31FCA] shall not grant authorisation of an AIF as an MMF if the AIF is legally prevented from marketing its units or shares in [F32the United Kingdom].

[F338.For the purposes of this Article, “UK law on alternative investment fund managers” means—

(a)the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement Directive 2011/61/EU—

(i)in the case of rules made by the FCA under FSMA, as they have effect on IP completion day; and

(ii)as amended from time to time, in all other cases;

(b)EU Regulations, made under Directive 2011/61/EU, which form part of retained direct EU legislation, as amended from time to time; and

(c)subordinate legislation (within the meaning of the Interpretation Act 1978) made under the Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 on or after IP completion day, as amended from time to time.]

Textual Amendments

Article 6U.K.Use of designation as MMF

1.A UCITS or an AIF shall use the designation ‘money market fund’ or ‘MMF’ in relation to itself or the units or shares it issues only [F34where—

(a)for a UK UCITS or a UK AIF, the UCITS or AIF has been authorised in accordance with this Regulation; or

(b)the UCITS or AIF is an EEA UCITS or EEA AIF which—

(i)is an EU MMF with temporary marketing permission; or

(ii)is a UK-recognised EU MMF;]

A UCITS or an AIF shall not use a misleading or inaccurate designation which would suggest it is an MMF, [F35unless—

(a)for a UK UCITS or a UK AIF, the UCITS or AIF has been authorised as an MMF in accordance with this Regulation; or

(b)the UCITS or AIF is an EEA UCITS or EEA AIF which—

(i)is an EU MMF with temporary marketing permission; or

(ii)is a UK-recognised EU MMF;]

A UCITS or an AIF shall not have characteristics which are substantially similar to those referred to in Article 1(1), [F36unless—

(a)for a UK UCITS or a UK AIF, the UCITS or AIF has been authorised as an MMF in accordance with this Regulation; or

(b)the UCITS or AIF is an EEA UCITS or EEA AIF which—

(i)is an EU MMF with temporary marketing permission; or

(ii)is a UK-recognised EU MMF;]

2.The use of the designation ‘money market fund’, ‘MMF’ or of another designation that suggests that a UCITS or AIF is an MMF shall mean use in any external documents, prospectuses, reports, statements, advertisements, communications, letters or any other material addressed to or intended for distribution to prospective investors, unit-holders, shareholders or [F37the FCA] in written, oral, electronic or any other form.

[F383.—

(1) For the purposes of this Article, “UK-recognised EU MMF” means an EU MMF which satisfies the condition in subparagraph (2) and—

(a)which is a recognised scheme under section 272 of FSMA; or

(b)in relation to which the FCA has received written notification under regulation 57 (subject to paragraph (4)), 58 or 59 of the AIFM Regulations.

(2)An EU MMF satisfies the condition in this subparagraph if, immediately before the relevant date, it was—

(a)a recognised scheme under Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019; or

(b)marketed in the United Kingdom under Part 9A of the AIFM Regulations.

(3)For the purposes of subparagraph (2), the “relevant date” is the date on which—

(a)the EU MMF was declared to be a recognised scheme under section 272 of FSMA, or

(b)the FCA received the written notification referred to in subparagraph 1(b).

(4)If an EU MMF was marketed in the United Kingdom by an EEA AIFM before IP completion day under regulation 57 of the AIFM Regulations, the AIFM must give notice to the FCA for the purposes of subparagraph 1(b) under regulation 58 or 59 of those Regulations.]

Textual Amendments

Article 7U.K.Applicable rules

[F391.An MMF authorised under this Regulation and the manager of the MMF must comply at all times with this Regulation.

1A.An EU MMF marketed in the United Kingdom under a temporary marketing permission must comply at all times with the EU MMF Regulation.

2. Unless otherwise specified in this Regulation, an MMF which is a UK UCITS and the manager of the MMF must comply at all times with the requirements of UK law on undertakings for collective investment in transferable securities.

2A.Unless otherwise specified in this Regulation, an MMF which is an EEA UCITS and the manager of the MMF must comply at all times with—

(a)the requirements of the EU MMF Regulation; and

(b)the requirements of Directive 2009/65/EC and any EU Regulations made under it, as the Directive and Regulations have effect in EU law.

3.Unless otherwise specified in this Regulation, an MMF which is a UK AIF and the manager of the MMF must comply at all times with the requirements of UK law on alternative investment fund managers (within the meaning of Article 5(8)).

3A.Unless otherwise specified in this Regulation, an MMF which is an EEA AIF and the manager of the MMF must comply at all times with—

(a)the requirements of the EU MMF Regulation; and

(b)the requirements of Directive 2011/61/EU, as it has effect in EU law.]

4.The manager of an MMF shall be responsible for ensuring compliance with this Regulation and shall be liable for any loss or damage resulting from non-compliance with this Regulation.

5.This Regulation shall not prevent MMFs from applying investment limits that are stricter than those required by this Regulation.

[F406.For the purposes of paragraph 2, “UK law on undertakings for collective investment in transferable securities” means—

(a)the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement Directive 2009/65/EC—

(i)in the case of rules made by the FCA or by the PRA under FSMA, as they have effect on IP completion day; and

(ii)as amended from time to time, in all other cases;

(b)EU regulations, made under Directive 2009/65/EC, which form part of retained direct EU legislation, as amended from time to time; and

(c)subordinate legislation (within the meaning of the Interpretation Act 1978) made under the Undertakings for Collective Investment in Transferable Securities Regulations 2011 M15 on or after IP completion day, as amended from time to time.]

Textual Amendments

CHAPTER IIU.K.Obligations concerning the investment policies of MMFs

Section IU.K.General rules and eligible assets

Article 8U.K.General principles

1.Where an MMF comprises more than one investment compartment, each compartment shall be regarded as a separate MMF for the purposes of Chapters II to VII.

2.MMFs authorised as [F41UK UCITS] shall not be subject to the [F42following] obligations concerning investment policies of UCITS laid down in [F43UK law implementing] Articles 49 to 50a, Article 51(2), and Articles 52 to 57 of Directive 2009/65/EC, unless explicitly specified otherwise in this Regulation.

[F443.The reference in paragraph 2 to UK law is a reference to the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement the provisions of Directive 2009/65/EC referred to in paragraph 2—

(a)in the case of rules made by the FCA or by the PRA under FSMA, as they have effect on IP completion day; and

(b)as amended from time to time, in all other cases.]

Textual Amendments

Article 9U.K.Eligible assets

1.An MMF shall invest only in one or more of the following categories of financial assets and only under the conditions specified in this Regulation:

(a)money market instruments including financial instruments issued or guaranteed separately or jointly by the [F45European] Union, the national, regional and local administrations of [F46the United Kingdom or] the Member States or their central banks, the European Central Bank, the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility, a central authority or central bank of a [F47country other than the United Kingdom or a Member State], the International Monetary Fund, the International Bank for Reconstruction and Development, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the Bank for International Settlements or any other relevant international financial institution or organisation to which [F48the United Kingdom or] one or more Member States belong;

(b)eligible securitisations and asset-backed commercial paper (ABCPs);

(c)deposits with credit institutions;

(d)financial derivative instruments;

(e)repurchase agreements that fulfil the conditions set out in Article 14;

(f)reverse repurchase agreements that fulfil the conditions set out in Article 15;

(g)units or shares of other MMFs [F49or EU MMFs].

2.An MMF shall not undertake any of the following activities:

(a)investing in assets other than those referred to in paragraph 1;

(b)short sale of any of the following instruments: money market instruments, securitisations, ABCPs and units or shares of other MMFs;

(c)taking direct or indirect exposure to equity or commodities, including via derivatives, certificates representing them, indices based on them, or any other means or instrument that would give an exposure to them;

(d)entering into securities lending agreements or securities borrowing agreements, or any other agreement that would encumber the assets of the MMF;

(e)borrowing and lending cash.

3.An MMF may hold ancillary liquid assets F50....

Textual Amendments

Article 10U.K.Eligible money market instruments

1.A money market instrument shall be eligible for investment by an MMF provided that it fulfils all of the following requirements:

(a)it falls within one of the categories of money market instruments referred to in [F51rule 5.2.8 of the Collective Investment Schemes sourcebook];

(b)it displays one of the following alternative characteristics:

(i)

it has a legal maturity at issuance of 397 days or less;

(ii)

it has a residual maturity of 397 days or less;

(c)the issuer of the money market instrument and the quality of the money market instrument have received a favourable assessment pursuant to Articles 19 to 22;

(d)where an MMF invests in a securitisation or ABCP, it is subject to the requirements laid down in Article 11.

2.Notwithstanding point (b) of paragraph 1, standard MMFs shall also be allowed to invest in money market instruments with a residual maturity until the legal redemption date of less than or equal to 2 years, provided that the time remaining until the next interest rate reset date is 397 days or less. For that purpose, floating-rate money-market instruments and fixed-rate money-market instruments hedged by a swap arrangement shall be reset to a money market rate or index.

3.Point (c) of paragraph 1 shall not apply to money market instruments issued or guaranteed by the [F52European] Union, a central authority or central bank of [F53the United Kingdom or] a Member State, the European Central Bank, the European Investment Bank, the European Stability Mechanism or the European Financial Stability Facility.

Textual Amendments

Article 11U.K.Eligible securitisations and ABCPs

1.Both a securitisation and an ABCP shall be considered to be eligible for investment by an MMF provided that the securitisation or ABCP is sufficiently liquid, has received a favourable assessment pursuant to Articles 19 to 22, and is any of the following:

(a)a securitisation referred to in Article 13 of Commission Delegated Regulation (EU) 2015/61(1);

(b)an ABCP issued by an ABCP programme which:

(i)

is fully supported by a regulated credit institution that covers all liquidity, credit and material dilution risks, as well as ongoing transaction costs and ongoing programme-wide costs related to the ABCP, if necessary to guarantee the investor the full payment of any amount under the ABCP;

(ii)

is not a re-securitisation and the exposures underlying the securitisation at the level of each ABCP transaction do not include any securitisation position;

(iii)

does not include a synthetic securitisation as defined in point (11) of Article 242 of Regulation (EU) No 575/2013;

[F54(c)a simple, transparent and standardised (STS) securitisation, as determined in accordance with the criteria and conditions laid down in Articles 20, 21 and 22 of Regulation (EU) 2017/2402 of the European Parliament and of the Council(2), or an STS ABCP, as determined in accordance with the criteria and conditions laid down in Articles 24, 25 and 26 of that Regulation.]

[F55In the first subparagraph, in point (c)—

(a)the reference to a simple, transparent and standardised (STS) securitisation includes a reference to a securitisation notified in accordance with Article 27 of the Securitisation Regulation before IP completion day, or before the expiry of a period of two years beginning with IP completion day, where the person responsible for the notification (the originator and sponsor or, in the case of an ABCP programme, the sponsor) is established in an EEA State; and

(b)in relation to any securitisation so notified a reference to a numbered Article of the Securitisation Regulation is a reference to the Article so numbered of that Regulation as it had or has effect in relation to an EEA State at any time on and after the date of the notification and before the end of the period referred to in point (a).

In the second subparagraph ‘the Securitisation Regulation’ means Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation.]

2.A short-term MMF may invest in the securitisations or ABCPs referred to in paragraph 1 provided any of the following conditions is fulfilled, as applicable:

(a)the legal maturity at issuance of the securitisations referred to in point (a) of paragraph 1 is 2 years or less and the time remaining until the next interest rate reset date is 397 days or less;

(b)the legal maturity at issuance or residual maturity of the securitisations or ABCPs referred to in points (b) and (c) of paragraph 1 is 397 days or less;

(c)the securitisations referred to in points (a) and (c) of paragraph 1 are amortising instruments and have a WAL of 2 years or less.

3.A standard MMF may invest in the securitisations or ABCPs referred to in paragraph 1 provided any of the following conditions is fulfilled, as applicable:

(a)the legal maturity at issuance or residual maturity of the securitisations and ABCPs referred to in points (a), (b) and (c) of paragraph 1 is 2 years or less and the time remaining until the next interest rate reset date is 397 days or less;

(b)the securitisations referred to in points (a) and (c) of paragraph 1 are amortising instruments and have a WAL of 2 years or less.

4.F56...

For the purposes of the first subparagraph, the criteria identifying STS securitisations and ABCPs shall include at least the following:

(a)requirements relating to the simplicity of the securitisation, including its true sale character and the respect of standards relating to the underwriting of the exposures;

(b)requirements relating to standardisation of the securitisation, including risk retention requirements;

(c)requirements relating to the transparency of the securitisation, including the provision of information to potential investors;

(d)for ABCPs, in addition to points (a), (b) and (c), requirements relating to the sponsor and to the sponsor support of the ABCP programme.

Textual Amendments

Article 12U.K.Eligible deposits with credit institutions

A deposit with a credit institution shall be eligible for investment by an MMF provided that all of the following conditions are fulfilled:

(a)the deposit is repayable on demand or is able to be withdrawn at any time;

(b)the deposit matures in no more than 12 months;

[F57(c)the credit institution has its registered office in the United Kingdom or in a Member State or, where the credit institution has its registered office in a country other than the United Kingdom or a Member State, it is subject to prudential rules considered equivalent to those laid down—

(i)in European Union law in accordance with a decision adopted before IP completion day by the Commission under the procedure laid down in Article 107(4) of Regulation (EU) No 575/2013; or

(ii)in the law of the United Kingdom, in accordance with regulations made on or after IP completion day by the Treasury under Article 107(4) of that Regulation as it forms part of domestic law under section 3 of the European Union (Withdrawal) Act 2018.]

Textual Amendments

Article 13U.K.Eligible financial derivative instruments

A financial derivative instrument shall be eligible for investment by an MMF provided it [F58satisfies the conditions in Article 2a(2)(a), (b) or (c) of this Regulation] or OTC and provided that all of the following conditions are fulfilled:

(a)

the underlying of the derivative instrument consists of interest rates, foreign exchange rates, currencies or indices representing one of those categories;

(b)

the derivative instrument serves only the purpose of hedging the interest rate or exchange rate risks inherent in other investments of the MMF;

(c)

the counterparties to OTC derivative transactions are institutions subject to prudential regulation and supervision and belonging to the categories approved by the [F59FCA];

(d)

the OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the MMF's initiative.

Textual Amendments

Article 14U.K.Eligible repurchase agreements

A repurchase agreement shall be eligible to be entered into by an MMF provided that all of the following conditions are fulfilled:

(a)

it is used on a temporary basis, for no more than seven working days, only for liquidity management purposes and not for investment purposes other than as referred to in point (c);

(b)

the counterparty receiving assets transferred by the MMF as collateral under the repurchase agreement is prohibited from selling, investing, pledging or otherwise transferring those assets without the MMF's prior consent;

(c)

the cash received by the MMF as part of the repurchase agreement is able to be:

(i)

[F60placed on deposits with credit institutions which are repayable on demand or have the right to be withdrawn, and maturing in no more than 12 months, provided that the credit institution has its registered office in the United Kingdom or in a Member State or, if the credit institution has its registered office in a country other than the United Kingdom or a Member State, provided that it is subject to prudential rules considered by the FCA as equivalent to those laid down in the law of the United Kingdom; or]

(ii)

invested in assets referred to in Article 15(6), but shall not otherwise be invested in eligible assets as referred to in Article 9, transferred or otherwise reused;

(d)

the cash received by the MMF as part of the repurchase agreement does not exceed 10 % of its assets;

(e)

the MMF has the right to terminate the agreement at any time upon giving prior notice of no more than two working days.

Textual Amendments

Article 15U.K.Eligible reverse repurchase agreements

1.A reverse repurchase agreement shall be eligible to be entered into by an MMF provided that all of the following conditions are fulfilled:

(a)the MMF has the right to terminate the agreement at any time upon giving prior notice of no more than two working days;

(b)the market value of the assets received as part of the reverse repurchase agreement is at all times at least equal to the value of the cash paid out.

2.The assets received by an MMF as part of a reverse repurchase agreement shall be money market instruments that fulfil the requirements set out in Article 10.

The assets received by an MMF as part of a reverse repurchase agreement shall not be sold, reinvested, pledged or otherwise transferred.

3.Securitisations and ABCPs shall not be received by an MMF as part of a reverse repurchase agreement.

4.The assets received by an MMF as part of a reverse repurchase agreement shall be sufficiently diversified with a maximum exposure to a given issuer of 15 % of the MMF's NAV, except where those assets take the form of money market instruments that fulfil the requirements of Article 17(7). In addition, the assets received by an MMF as part of a reverse repurchase agreement shall be issued by an entity that is independent from the counterparty and is expected not to display a high correlation with the performance of the counterparty.

5.An MMF that enters into a reverse repurchase agreement shall ensure that it is able to recall the full amount of cash at any time on either an accrued basis or a mark-to-market basis. When the cash is recallable at any time on a mark-to-market basis, the mark-to-market value of the reverse repurchase agreement shall be used for the calculation of the NAV of the MMF.

6.By way of derogation from paragraph 2 of this Article, an MMF may receive as part of a reverse repurchase agreement liquid transferable securities or money market instruments other than those that fulfil the requirements set out in Article 10 provided that those assets comply with one of the following conditions:

(a)they are issued or guaranteed by the [F61European] Union, a central authority or central bank of [F62the United Kingdom or] a Member State, the European Central Bank, the European Investment Bank, the European Stability Mechanism or the European Financial Stability Facility provided that a favourable assessment has been received pursuant to Articles 19 to 22;

(b)they are issued or guaranteed by a central authority or central bank of a [F63country other than the United Kingdom or a Member State], provided that a favourable assessment has been received pursuant to Articles 19 to 22.

The assets received as part of a reverse repurchase agreement in accordance with the first subparagraph of this paragraph shall be disclosed to MMF investors,

(a)

[F64for UCITS, in the half-yearly and annual reports referred to in Section 4.5 of the Collective Investment Schemes sourcebook; and.

(b)

for AIFs, the annual report referred to in Section 3.3 of the Investment Fund sourcebook.]

The assets received as part of a reverse repurchase agreement in accordance with the first subparagraph of this paragraph shall fulfil the requirements of Article 17(7).

7.The [F65Treasury may by Regulations specify] quantitative and qualitative liquidity requirements applicable to assets referred to in paragraph 6 and quantitative and qualitative credit quality requirements applicable to assets referred to in point (a) of paragraph 6 of this Article.

F66...

Textual Amendments

Article 16U.K.Eligible units or shares of MMFs

1.An MMF may acquire the units or shares of any other MMF [F67(including an EU MMF)] (‘targeted MMF’) provided that all of the following conditions are fulfilled:

(a)no more than 10 % of the assets of the targeted MMF are able, according to its fund rules or instruments of incorporation, to be invested in aggregate in units or shares of other MMFs;

(b)the targeted MMF does not hold units or shares in the acquiring MMF.

[F68A targeted MMF] shall not invest in the acquiring MMF during the period in which the acquiring MMF holds units or shares in it.

2.An MMF may acquire the units or shares of other MMFs [F69(including EU MMFs)], provided that no more than 5 % of its assets are invested in units or shares of a single MMF.

3.An MMF may, in aggregate, invest no more than 17,5 % of its assets in units or shares of other MMFs [F70(including EU MMFs)].

4.Units or shares of other MMFs [F71(including EU MMFs)] shall be eligible for investment by an MMF provided that all of the following conditions are fulfilled:

(a)the targeted MMF is authorised under this Regulation [F72or under the EU MMF Regulation];

(b)where the targeted MMF is managed, whether directly or under a delegation, by the same manager as that of the acquiring MMF or by any other company to which the manager of the acquiring MMF is linked by common management or control, or by a substantial direct or indirect holding, the manager of the targeted MMF, or that other company, is prohibited from charging subscription or redemption fees on account of the investment by the acquiring MMF in the units or shares of the targeted MMF;

(c)where an MMF invests 10 % or more of its assets in units or shares of other MMFs [F73(including EU MMFs)]:

(i)

the prospectus of that MMF shall disclose the maximum level of the management fees that may be charged to the MMF itself and to the [F74targeted MMFs] in which it invests; and

(ii)

the annual report shall indicate the maximum proportion of management fees charged to the MMF itself and to the [F75targeted MMFs] in which it invests.

5.Paragraphs 2 and 3 of this Article shall not apply to an MMF that is an AIF authorised in accordance with Article 5, where all of the following conditions are met:

(a)the MMF is marketed solely through an employee savings scheme governed by national law and which has only natural persons as investors;

(b)the employee savings scheme referred to in point (a) only allows investors to redeem their investment subject to restrictive redemption terms which are laid down in national law, whereby redemptions may only take place in certain circumstances that are not linked to market developments.

By way of derogation from paragraphs 2 and 3 of this Article, an MMF that is a [F76UK UCITS] authorised in accordance with Article 4(2) [F77, (2A) or (2B)] may acquire units or shares in other MMFs in accordance with [F78the Schedule or rules 5.8.2, 5.8.3 and 5.8.4 of the Collective Investment Schemes sourcebook] under the following conditions:

(a)the MMF is marketed solely through an employee savings scheme governed by national law and which has only natural persons as investors;

(b)the employee savings scheme referred to in point (a) only allows investors to redeem their investment subject to restrictive redemption terms which are laid down in national law, whereby redemptions may only take place in certain circumstances that are not linked to market developments.

6.Short-term MMFs may only invest in units or shares of other short-term MMFs.

7.Standard MMFs may invest in units or shares of short-term MMFs and standard MMFs.

Textual Amendments

Section IIU.K.Provisions on investment policies

Article 17U.K.Diversification

1.An MMF shall invest no more than:

(a)5 % of its assets in money market instruments, securitisations and ABCPs issued by the same body;

(b)10 % of its assets in deposits made with the same credit institution, unless the structure of the banking sector in the [F79United Kingdom] is such that there are insufficient viable credit institutions to meet that diversification requirement and it is not economically feasible for the MMF to make deposits in [F80a Member State], in which case up to 15 % of its assets may be deposited with the same credit institution.

2.By way of derogation from point (a) of paragraph 1, a VNAV MMF may invest up to 10 % of its assets in money market instruments, securitisations and ABCPs issued by the same body provided that the total value of such money market instruments, securitisations and ABCPs held by the VNAV MMF in each issuing body in which it invests more than 5 % of its assets does not exceed 40 % of the value of its assets.

3.Until the date of application of the delegated act referred to in Article 11(4), the aggregate of all of an MMF's exposures to securitisations and ABCPs shall not exceed 15 % of the assets of the MMF.

As from the date of application of the delegated act referred to in Article 11(4), the aggregate of all of an MMF's exposures to securitisations and ABCPs shall not exceed 20 % of the assets of the MMF, whereby up to 15 % of the assets of the MMF may be invested in securitisations and ABCPs that do not comply with the criteria for the identification of STS securitisations and ABCPs.

4.The aggregate risk exposure to the same counterparty of an MMF stemming from OTC derivative transactions which fulfil the conditions set out in Article 13 shall not exceed 5 % of the assets of the MMF.

5.The aggregate amount of cash provided to the same counterparty of an MMF in reverse repurchase agreements shall not exceed 15 % of the assets of the MMF.

6.Notwithstanding the individual limits laid down in paragraphs 1 and 4, an MMF shall not combine, where to do so would result in an investment of more than 15 % of its assets in a single body, any of the following:

(a)investments in money market instruments, securitisations and ABCPs issued by that body;

(b)deposits made with that body;

(c)OTC financial derivative instruments giving counterparty risk exposure to that body.

By way of derogation from the diversification requirement provided for in the first subparagraph, where the structure of the financial market in the [F81United Kingdom] is such that there are insufficient viable financial institutions to meet that diversification requirement and it is not economically feasible for the MMF to use financial institutions in [F82a Member State], the MMF may combine the types of investments referred to in points (a) to (c) up to a maximum investment of 20 % of its assets in a single body.

7.By way of derogation from point (a) of paragraph 1, the [F83 FCA] may authorise an MMF to invest, in accordance with the principle of risk-spreading, up to 100 % of its assets in different money market instruments issued or guaranteed separately or jointly by the [F84European] Union, the national, regional and local administrations of [F85the United Kingdom or] the Member States or their central banks, the European Central Bank, the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility, a central authority or central bank of a [F86country other than the United Kingdom or a Member State], the International Monetary Fund, the International Bank for Reconstruction and Development, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the Bank for International Settlements, or any other relevant international financial institution or organisation to which [F87the United Kingdom or] one or more Member States belong.

The first subparagraph shall only apply where all of the following requirements are met:

(a)the MMF holds money market instruments from at least six different issues by the issuer;

(b)the MMF limits the investment in money market instruments from the same issue to a maximum of 30 % of its assets;

(c)the MMF makes express reference, in its fund rules or instruments of incorporation, to all administrations, institutions or organisations referred to in the first subparagraph that issue or guarantee separately or jointly money market instruments in which it intends to invest more than 5 % of its assets;

(d)the MMF includes a prominent statement in its prospectus and marketing communications drawing attention to the use of the derogation and indicating all administrations, institutions or organisations referred to in the first subparagraph that issue or guarantee separately or jointly money market instruments in which it intends to invest more than 5 % of its assets.

8.Notwithstanding the individual limits laid down in paragraph 1, an MMF may invest no more than 10 % of its assets in bonds issued by a single credit institution that has its registered office in [F88the United Kingdom or] a Member State and is subject by law to special public supervision designed to protect bond-holders. In particular, sums deriving from the issue of those bonds shall be invested in accordance with the law in assets which, during the whole period of validity of the bonds, are capable of covering claims attaching to the bonds and which, in the event of failure of the issuer, would be used on a priority basis for the reimbursement of the principal and payment of the accrued interest.

Where an MMF invests more than 5 % of its assets in the bonds referred to in the first subparagraph issued by a single issuer, the total value of those investments shall not exceed 40 % of the value of the assets of the MMF.

9.Notwithstanding the individual limits laid down in paragraph 1, an MMF may invest no more than 20 % of its assets in bonds issued by a single credit institution where the requirements set out in point (f) of Article 10(1) or point (c) of Article 11(1) of Delegated Regulation (EU) 2015/61 are met, including any possible investment in assets referred to in paragraph 8 of this Article.

Where an MMF invests more than 5 % of its assets in the bonds referred to in the first subparagraph issued by a single issuer, the total value of those investments shall not exceed 60 % of the value of the assets of the MMF, including any possible investment in assets referred to in paragraph 8, respecting the limits set out therein.

10.Companies which are included in the same group for the purposes of consolidated accounts under [F89the Companies Partnerships and Groups (Accounts and Reports) Regulations 2015] or in accordance with recognised international accounting rules, shall be regarded as a single body for the purpose of calculating the limits referred to in paragraphs 1 to 6 of this Article.

Textual Amendments

Article 18U.K.Concentration

1.An MMF shall not hold more than 10 % of the money market instruments, securitisations and ABCPs issued by a single body.

2.The limit laid down in paragraph 1 shall not apply in respect of holdings of money market instruments issued or guaranteed by the [F90European] Union, national, regional and local administrations of [F91the United Kingdom or] the Member States or their central banks, the European Central Bank, the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility, a central authority or central bank of a [F92country other than the United Kingdom or a Member State], the International Monetary Fund, the International Bank for Reconstruction and Development, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the Bank for International Settlements, or any other relevant international financial institution or organisation to which [F93the United Kingdom or] one or more Member States belong.

Textual Amendments

Section IIIU.K.Credit quality of money market instruments, securitisations and ABCPs

Article 19U.K.Internal credit quality assessment procedure

1.The manager of an MMF shall establish, implement and consistently apply a prudent internal credit quality assessment procedure for determining the credit quality of money market instruments, securitisations and ABCPs, taking into account the issuer of the instrument and the characteristics of the instrument itself.

2.The manager of an MMF shall ensure that the information used in applying the internal credit quality assessment procedure is of sufficient quality, up-to-date and from reliable sources.

3.The internal assessment procedure shall be based on prudent, systematic and continuous assessment methodologies. The methodologies used shall be subject to validation by the manager of an MMF based on historical experience and empirical evidence, including back testing.

4.The manager of an MMF shall ensure that the internal credit quality assessment procedure complies with all of the following general principles:

(a)an effective process is to be established to obtain and update relevant information on the issuer and the instrument's characteristics;

(b)adequate measures are to be adopted and implemented to ensure that the internal credit quality assessment is based on a thorough analysis of the information that is available and pertinent, and includes all relevant driving factors that influence the creditworthiness of the issuer and the credit quality of the instrument;

(c)the internal credit quality assessment procedure is to be monitored on an ongoing basis and all credit quality assessments shall be reviewed at least annually;

(d)while there is to be no mechanistic over-reliance on external ratings in accordance with Article 5a of Regulation (EC) No 1060/2009, the manager of an MMF shall undertake a new credit quality assessment for a money market instrument, securitisations and ABCPs when there is a material change that could have an impact on the existing assessment of the instrument;

(e)the credit quality assessment methodologies are to be reviewed at least annually by the manager of an MMF to determine whether they remain appropriate for the current portfolio and external conditions and the review shall be transmitted to the [F94FCA]. Where the manager of the MMF becomes aware of errors in the credit quality assessment methodology or in its application, it shall immediately correct those errors;

(f)when methodologies, models or key assumptions used in the internal credit quality assessment procedure are changed, the manager of an MMF is to review all affected internal credit quality assessments as soon as possible.

Textual Amendments

Article 20U.K.Internal credit quality assessment

1.The manager of an MMF shall apply the procedure laid down in Article 19 to determine whether the credit quality of a money market instrument, securitisation or ABCP receives a favourable assessment. Where a credit rating agency registered and certified in accordance with Regulation (EC) No 1060/2009 has provided a rating of that money market instrument, the manager of the MMF may have regard to such rating and supplementary information and analysis in its internal credit quality assessment, while not solely or mechanistically relying on such rating in accordance with Article 5a of Regulation (EC) No 1060/2009.

2.The credit quality assessment shall take into account at least the following factors and general principles:

(a)the quantification of the credit risk of the issuer and of the relative risk of default of the issuer and of the instrument;

(b)qualitative indicators on the issuer of the instrument, including in the light of the macroeconomic and financial market situation;

(c)the short-term nature of money market instruments;

(d)the asset class of the instrument;

(e)the type of issuer distinguishing at least the following types of issuers: national, regional or local administrations, financial corporations, and non-financial corporations;

(f)for structured financial instruments, the operational and counterparty risk inherent within the structured financial transaction and, in case of exposure to securitisations, the credit risk of the issuer, the structure of the securitisation and the credit risk of the underlying assets;

(g)the liquidity profile of the instrument.

The manager of an MMF may, in addition to the factors and general principles referred to in this paragraph, take into account warnings and indicators when determining the credit quality of a money market instrument referred to in Article 17(7).

Article 21U.K.Documentation

1.The manager of an MMF shall document its internal credit quality assessment procedure and credit quality assessments. Documentation shall include all of the following:

(a)the design and operational details of its internal credit quality assessment procedure in a manner that allows [F95 the FCA] to understand and evaluate the appropriateness of a credit quality assessment;

(b)the rationale for and the analysis supporting the credit quality assessment, as well as the manager of the MMF's choice of criteria for, and the frequency of, the review of the credit quality assessment;

(c)all major changes to the internal credit quality assessment procedure, including identification of the triggers of such changes;

(d)the organisation of the internal credit quality assessment procedure and the internal control structure;

(e)complete internal credit quality assessment histories on instruments, issuers and, where relevant, recognised guarantors;

(f)the person or persons responsible for the internal credit quality assessment procedure.

2.The manager of an MMF shall keep all the documentation referred to in paragraph 1 for at least three complete annual accounting periods.

3.The internal credit quality assessment procedure shall be detailed in the fund rules or rules of incorporation of the MMF and all documents referred to in paragraph 1 shall be made available upon request to the [F96FCA].

Textual Amendments

Article 22U.K.Delegated acts for the credit quality assessment

The [F97Treasury may by Regulations specify] the following points:

(a)

the criteria for the validation of the credit quality assessment methodology, as referred to in Article 19(3);

(b)

the criteria for quantification of the credit risk, and of the relative risk of default of an issuer and of the instrument, as referred to in point (a) of Article 20(2);

(c)

the criteria for establishing qualitative indicators on the issuer of the instrument, as referred to in point (b) of Article 20(2);

(d)

the meaning of material change as referred to in point (d) of Article 19(4).

Textual Amendments

Article 23U.K.Governance of the credit quality assessment

1.The internal credit quality assessment procedure shall be approved by the senior management, the governing body, and, where it exists, the supervisory function of the manager of an MMF.

Those parties shall have a good understanding of the internal credit quality assessment procedure and the methodologies applied by the manager of an MMF, as well as a detailed comprehension of the associated reports.

2.The manager of an MMF shall report to the parties referred to in paragraph 1 on the MMF's credit risk profile, based on an analysis of the MMF's internal credit quality assessments. Reporting frequencies shall depend on the significance and type of information and shall be at least annual.

3.Senior management shall ensure, on an ongoing basis, that the internal credit quality assessment procedure is operating properly.

Senior management shall be regularly informed about the performance of the internal credit quality assessment procedures, the areas where deficiencies were identified, and the status of efforts and actions taken to improve previously identified deficiencies.

4.Internal credit quality assessments and their periodic reviews by the manager of an MMF shall not be performed by the persons performing or responsible for the portfolio management of an MMF.

CHAPTER IIIU.K.Obligations concerning the risk management of MMFs

Article 24U.K.Portfolio rules for short-term MMFs

1.A short-term MMF shall comply on an ongoing basis with all of the following portfolio requirements:

(a)its portfolio is to have a WAM of no more than 60 days;

(b)its portfolio is to have a WAL of no more than 120 days, subject to the second and third subparagraphs;

(c)for LVNAV MMFs and public debt CNAV MMFs, at least 10 % of their assets are to be comprised of daily maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of one working day or cash which is able to be withdrawn by giving prior notice of one working day. A LVNAV MMF or public debt CNAV MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 10 % of its portfolio in daily maturing assets;

(d)for a short-term VNAV MMF, at least 7,5 % of its assets are to be comprised of daily maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of one working day, or cash which is able to be withdrawn by giving prior notice of one working day. A short-term VNAV MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 7,5 % of its portfolio in daily maturing assets;

(e)for LVNAV MMFs and public debt CNAV MMFs, at least 30 % of their assets are to be comprised of weekly maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of five working days or cash which is able to be withdrawn by giving prior notice of five working days. A LVNAV MMF or public debt CNAV MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 30 % of its portfolio in weekly maturing assets;

(f)for a short-term VNAV MMF, at least 15 % of its assets are to be comprised of weekly maturing assets, reverse repurchase agreements which are able to be terminated by giving prior notice of five working days, or cash which is able to be withdrawn by giving prior notice of five working days. A short-term VNAV MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 15 % of its portfolio in weekly maturing assets;

(g)for the purpose of the calculation referred to in point (e), assets referred to in Article 17(7) which are highly liquid and can be redeemed and settled within one working day and have a residual maturity of up to 190 days may also be included within the weekly maturing assets of a LVNAV MMF and public debt CNAV MMF, up to a limit of 17,5 % of its assets;

(h)for the purpose of the calculation referred to in point (f), money market instruments or units or shares of other MMFs may be included within the weekly maturing assets of a short-term VNAV MMF up to a limit of 7,5 % of its assets provided they are able to be redeemed and settled within five working days.

For the purposes of point (b) of the first subparagraph, when calculating the WAL for securities, including structured financial instruments, a short-term MMF shall base the maturity calculation on the residual maturity until the legal redemption of the instruments. However, in the event that a financial instrument embeds a put option, a short-term MMF may base the maturity calculation on the exercise date of the put option instead of the residual maturity, but only if all of the following conditions are fulfilled at all times:

(i)

the put option is able to be freely exercised by the short-term MMF at its exercise date;

(ii)

the strike price of the put option remains close to the expected value of the instrument at the exercise date;

(iii)

the investment strategy of the short-term MMF implies that there is a high probability that the option will be exercised at the exercise date.

By way of derogation from the second subparagraph, when calculating the WAL for securitisations and ABCPs, a short-term MMF may instead, in the case of amortising instruments, base the maturity calculation on one of the following:

(i)

the contractual amortisation profile of such instruments;

(ii)

the amortisation profile of the underlying assets from which the cash-flows for the redemption of such instruments result.

2.If the limits referred to in this Article are exceeded for reasons beyond the control of an MMF, or as a result of the exercise of subscription or redemption rights, that MMF shall adopt as a priority objective the correction of that situation, taking due account of the interests of its unit holders or shareholders.

3.All MMFs referred to in Article 3(1) of this Regulation may take the form of a short-term MMF.

Article 25U.K.Portfolio rules for standard MMFs

1.A standard MMF shall comply on an ongoing basis with all of the following requirements:

(a)its portfolio is to have at all times a WAM of no more than 6 months;

(b)its portfolio is to have at all times a WAL of no more than 12 months, subject to the second and third subparagraphs;

(c)at least 7,5 % of its assets are to be comprised of daily maturing assets, reverse repurchase agreements which can be terminated by giving prior notice of one working day or cash which can be withdrawn by giving prior notice of one working day. A standard MMF is not to acquire any asset other than a daily maturing asset when such acquisition would result in that MMF investing less than 7,5 % of its portfolio in daily maturing assets;

(d)at least 15 % of its assets are to be comprised of weekly maturing assets, reverse repurchase agreements which can be terminated by giving prior notice of five working days or cash which can be withdrawn by giving prior notice of five working days. A standard MMF is not to acquire any asset other than a weekly maturing asset when such acquisition would result in that MMF investing less than 15 % of its portfolio in weekly maturing assets;

(e)for the purpose of the calculation referred to in point (d), money market instruments or units or shares of other MMFs may be included within the weekly maturing assets up to 7,5 % of its assets provided they are able to be redeemed and settled within five working days.

For the purposes of point (b) of the first subparagraph, when calculating the WAL for securities, including structured financial instruments, a standard MMF shall base the maturity calculation on the residual maturity until the legal redemption of the instruments. However, in the event that a financial instrument embeds a put option, a standard MMF may base the maturity calculation on the exercise date of the put option instead of the residual maturity, but only if all of the following conditions are fulfilled at all times:

(i)

the put option is able to be freely exercised by the standard MMF at its exercise date;

(ii)

the strike price of the put option remains close to the expected value of the instrument at the exercise date;

(iii)

the investment strategy of the standard MMF implies that there is a high probability that the option will be exercised at the exercise date.

By way of derogation from the second subparagraph, when calculating the WAL for securitisations and ABCPs, a standard MMF may instead, in the case of amortising instruments, base the maturity calculation on one of the following:

(i)

the contractual amortisation profile of such instruments;

(ii)

the amortisation profile of the underlying assets from which the cash-flows for the redemption of such instruments result.

2.If the limits referred to in this Article are exceeded for reasons beyond the control of a standard MMF or as a result of the exercise of subscription or redemption rights, that MMF shall adopt as a priority objective the correction of that situation, taking due account of the interests of its unit holders or shareholders.

3.A standard MMF shall not take the form of a public debt CNAV MMF or a LVNAV MMF.

Article 26U.K.MMF credit ratings

An MMF that solicits or finances an external credit rating shall do so in accordance with Regulation (EC) No 1060/2009. The MMF or the manager of the MMF shall clearly indicate in the MMF's prospectus, and in all communication to investors in which the external credit rating is mentioned, that the rating was solicited or financed by the MMF or by the manager of the MMF.

Article 27U.K.‘Know your customer’ policy

1.Without prejudice to any more stringent requirements set out in [F98 the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017], the manager of an MMF shall establish, implement and apply procedures and exercise all due diligence with a view to anticipating the effect of concurrent redemptions by several investors, taking into account at least the type of investor, the number of units or shares in the fund owned by a single investor and the evolution of inflows and outflows.

2.If the value of the units or shares held by a single investor exceeds the amount of the corresponding daily liquidity requirement of an MMF, the manager of the MMF shall consider, in addition to the factors set out in paragraph 1, all of the following:

(a)identifiable patterns in investor cash needs, including the cyclical evolution of the number of shares in the MMF;

(b)the risk aversion of the different investors;

(c)the degree of correlation or close links between different investors in the MMF.

3.Where investors route their investments via an intermediary, the manager of an MMF shall request the information to comply with paragraphs 1 and 2 from the intermediary in order to manage appropriately the liquidity and investor concentration of the MMF.

4.The manager of an MMF shall ensure that the value of the units or shares held by a single investor does not materially impact the liquidity profile of the MMF where it accounts for a substantial part of the total NAV of the MMF.

Textual Amendments

Article 28U.K.Stress testing

1.Each MMF shall have in place sound stress testing processes that identify possible events or future changes in economic conditions which could have unfavourable effects on the MMF. The MMF or the manager of an MMF shall assess the possible impact that those events or changes could have on the MMF. The MMF or the manager of an MMF shall regularly conduct stress testing for different possible scenarios.

The stress tests shall be based on objective criteria and consider the effects of severe plausible scenarios. The stress test scenarios shall at least take into consideration reference parameters that include the following factors:

(a)hypothetical changes in the level of liquidity of the assets held in the portfolio of the MMF;

(b)hypothetical changes in the level of credit risk of the assets held in the portfolio of the MMF, including credit events and rating events;

(c)hypothetical movements of the interest rates and exchange rates;

(d)hypothetical levels of redemption;

(e)hypothetical widening or narrowing of spreads among indices to which interest rates of portfolio securities are tied;

(f)hypothetical macro systemic shocks affecting the economy as a whole.

2.In addition, in the case of public debt CNAV MMFs and LVNAV MMFs, the stress tests shall estimate for different scenarios the difference between the constant NAV per unit or share and the NAV per unit or share.

3.Stress tests shall be conducted at a frequency determined by the board of directors of the MMF, where applicable, or the board of directors of the manager of an MMF, after considering what an appropriate and reasonable interval in light of the market conditions is and after considering any envisaged changes in the portfolio of the MMF. Such frequency shall be at least bi-annual.

4.Where the stress test reveals any vulnerability of the MMF, the manager of an MMF shall draw up an extensive report with the results of the stress testing and a proposed action plan.

Where necessary, the manager of an MMF shall take action to strengthen the robustness of the MMF, including actions that reinforce the liquidity or the quality of the assets of the MMF and shall immediately inform the [F99FCA] of the measures taken.

5.The extensive report with the results of the stress testing and proposed action plan shall be submitted for examination to the board of directors of the MMF, where applicable, or the board of directors of the manager of an MMF. The board of directors shall amend the proposed action plan if necessary and approve the final action plan. The extensive report and the action plan shall be kept for a period of at least 5 years.

The extensive report and the action plan shall be submitted to the [F100FCA] for review.

F1016.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.[F102The FCA] shall issue guidelines with a view to establishing common reference parameters of the stress test scenarios to be included in the stress tests taking into account the factors specified in paragraph 1. The guidelines shall be updated at least every year taking into account the latest market developments.

Textual Amendments

CHAPTER IVU.K.Valuation rules

Article 29U.K.Valuation of MMFs

1.The assets of an MMF shall be valued on at least a daily basis.

2.The assets of an MMF shall be valued by using mark-to-market whenever possible.

3.When using mark- to-market:

(a)the asset of an MMF shall be valued at the more prudent side of bid and offer unless the asset can be closed out at mid-market;

(b)only good quality market data shall be used; such data shall be assessed on the basis of all of the following factors:

(i)

the number and quality of the counterparties;

(ii)

the volume and turnover in the market of the asset of the MMF;

(iii)

the issue size and the portion of the issue that the MMF plans to buy or sell.

4.Where use of mark-to-market is not possible or the market data is not of sufficient quality, an asset of an MMF shall be valued conservatively by using mark-to-model.

The model shall accurately estimate the intrinsic value of the asset of an MMF, based on all of the following up-to-date key factors:

(a)the volume and turnover in the market of that asset;

(b)the issue size and the portion of the issue that the MMF plans to buy or sell;

(c)market risk, interest rate risk, credit risk attached to the asset.

When using mark-to-model, the amortised cost method shall not be used.

5.A valuation carried out in accordance with paragraphs 2, 3, 4, 6 and 7 shall be communicated to the [F103FCA].

6.Notwithstanding paragraphs 2, 3 and 4, the assets of public debt CNAV MMFs may additionally be valued by using the amortised cost method.

7.By way of derogation from paragraphs 2 and 4, in addition to the mark-to-market referred to in paragraphs 2 and 3 and the mark-to-model referred to in paragraph 4, the assets of LVNAV MMFs that have a residual maturity of up to 75 days may be valued by using the amortised cost method.

The amortised cost method shall only be used for valuing an asset of a LVNAV MMF in circumstances where the price of that asset calculated in accordance with paragraphs 2, 3 and 4 does not deviate from the price of that asset calculated in accordance with the first subparagraph of this paragraph by more than 10 basis points. In the event of such a deviation, the price of that asset shall be calculated in accordance with paragraphs 2, 3 and 4.

Textual Amendments

Article 30U.K.Calculation of NAV per unit or share

1.An MMF shall calculate a NAV per unit or share as the difference between the sum of all assets of the MMF and the sum of all liabilities of the MMF valued in accordance with mark-to-market or mark-to-model, or both, divided by the number of outstanding units or shares of the MMF.

2.The NAV per unit or share shall be rounded to the nearest basis point or its equivalent when the NAV is published in a currency unit.

3.The NAV per unit or share of an MMF shall be calculated and published at least daily on the public section of the website of the MMF.

Article 31U.K.Calculation of the constant NAV per unit or share of public debt CNAV MMFs

1.A public debt CNAV MMF shall calculate a constant NAV per unit or share as the difference between the sum of all of its assets valued in accordance with the amortised cost method, as provided for in Article 29(6), and the sum of all of its liabilities, divided by the number of its outstanding units or shares.

2.The constant NAV per unit or share of a public debt CNAV MMF shall be rounded to the nearest percentage point or its equivalent when the constant NAV is published in a currency unit.

3.The constant NAV per unit or share of a public debt CNAV MMF shall be calculated at least daily.

4.The difference between the constant NAV per unit or share and the NAV per unit or share calculated in accordance with Article 30 shall be monitored and published daily on the public section of the website of the MMF.

Article 32U.K.Calculation of the constant NAV per unit or share of LVNAV MMFs

1.A LVNAV MMF shall calculate a constant NAV per unit or share as the difference between the sum of all of its assets valued in accordance with the amortised cost method as specified in Article 29(7), and the sum of all its liabilities, divided by the number of its outstanding units or shares.

2.The constant NAV per unit or share of a LVNAV MMF shall be rounded to the nearest percentage point or its equivalent when the constant NAV is published in a currency unit.

3.The constant NAV per unit or share of a LVNAV MMF shall be calculated at least daily.

4.The difference between the constant NAV per unit or share and the NAV per unit or share calculated in accordance with Article 30 shall be monitored and published daily on the public section of the website of the MMF.

Article 33U.K.Issue and redemption price

1.The units or shares of an MMF shall be issued or redeemed at a price that is equal to the MMF's NAV per unit or share, notwithstanding permitted fees or charges as specified in the prospectus of the MMF.

2.By way of derogation from paragraph 1:

(a)the units or shares of a public debt CNAV MMF may be issued or redeemed at a price that is equal to that MMF's constant NAV per unit or share;

(b)the units or shares of a LVNAV MMF may be issued or redeemed at a price that is equal to that MMF's constant NAV per unit or share, but only where the constant NAV per unit or share calculated in accordance with Article 32(1), (2) and (3) does not deviate from the NAV per unit or share calculated in accordance with Article 30 by more than 20 basis points.

In relation to point (b), when the constant NAV per unit or share calculated in accordance with Article 32(1), (2) and (3) deviates from the NAV per unit or share calculated in accordance with Article 30 by more than 20 basis points, the following redemption or subscription shall be undertaken at a price that is equal to the NAV per unit or share calculated in accordance with Article 30.

Potential investors shall, prior to the conclusion of the contract, be clearly warned in writing by the manager of an MMF of the circumstances in which the LVNAV MMF will no longer redeem or subscribe at a constant NAV per unit or share.

CHAPTER VU.K.Specific requirements for public debt CNAV MMFs and LVNAV MMFs

Article 34U.K.Specific requirements for public debt CNAV MMFs and LVNAV MMFs

1.The manager of a public debt CNAV MMF or of a LVNAV MMF shall establish, implement and consistently apply prudent and rigorous liquidity management procedures for ensuring compliance with the weekly liquidity thresholds applicable to such funds. The liquidity management procedures shall be clearly described in the fund rules or instruments of incorporation, as well as in the prospectus.

In ensuring compliance with the weekly liquidity thresholds, the following shall apply:

(a)whenever the proportion of weekly maturing assets as set out in point (e) of Article 24(1) falls below 30 % of the total assets of the public debt CNAV MMF or of the LVNAV MMF and the net daily redemptions on a single working day exceed 10 % of total assets, the manager of the public debt CNAV MMF or of the LVNAV MMF shall immediately inform its board thereof and the board shall undertake a documented assessment of the situation to determine the appropriate course of action having regard to the interests of the investors and shall decide whether to apply one or more of the following measures:

(i)

liquidity fees on redemptions that adequately reflect the cost to the MMF of achieving liquidity and ensure that investors who remain in the fund are not unfairly disadvantaged when other investors redeem their units or shares during the period;

(ii)

redemption gates that limit the amount of shares or units to be redeemed on any one working day to a maximum of 10 % of the shares or units in the MMF for any period up to 15 working days;

(iii)

suspension of redemptions for any period up to 15 working days; or

(iv)

take no immediate action other than fulfilling the obligation laid down in Article 24(2);

(b)whenever the proportion of weekly maturing assets as set out in point (e) of Article 24(1) falls below 10 % of its total assets, the manager of a public debt CNAV MMF or of a LVNAV MMF shall immediately inform its board thereof and the board shall undertake a documented assessment of the situation and, on the basis of such assessment and having regard to the interests of the investors, shall apply one or more of the following measures and document the reasons for its choice:

(i)

liquidity fees on redemptions that adequately reflect the cost to the MMF of achieving liquidity and ensure that investors who remain in the fund are not unfairly disadvantaged when other investors redeem their units or shares during the period;

(ii)

a suspension of redemptions for a period of up to 15 working days.

2.When, within a period of 90 days, the total duration of the suspensions exceeds 15 days, a public debt CNAV MMF or a LVNAV MMF shall automatically cease to be a public debt CNAV MMF or a LVNAV MMF. The public debt CNAV MMF or the LVNAV MMF shall immediately inform each investor thereof in writing in a clear and comprehensible way.

3.After the board of the public debt CNAV MMF or of the LVNAV MMF has determined its course of action with regard to both points (a) and (b) of paragraph 1, it shall promptly provide details of its decision to the [F104FCA].

Textual Amendments

CHAPTER VIU.K.External support

Article 35U.K.External support

1.A MMF shall not receive external support.

2.External support means direct or indirect support offered to an MMF by a third party, including a sponsor of the MMF, that is intended for or in effect would result in guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share of the MMF.

External support shall include:

(a)cash injections from a third party;

(b)purchase by a third party of assets of the MMF at an inflated price;

(c)purchase by a third party of units or shares of the MMF in order to provide liquidity to the fund;

(d)issuance by a third party of any kind of explicit or implicit guarantee, warranty or letter of support for the benefit of the MMF;

(e)any action by a third party the direct or indirect objective of which is to maintain the liquidity profile and the NAV per unit or share of the MMF.

CHAPTER VIIU.K.Transparency requirements

Article 36U.K.Transparency

1.An MMF shall indicate clearly which type of MMF it is in accordance with Article 3(1) and whether it is a short-term or a standard MMF in any external document, report, statement, advertisement, letter or any other written evidence issued by it or by the manager of the MMF, addressed to or intended for distribution to prospective investors, unit-holders, or shareholders.

2.The manager of an MMF shall, at least weekly, make all of the following information available to the MMF's investors:

(a)the maturity breakdown of the portfolio of the MMF;

(b)the credit profile of the MMF;

(c)the WAM and WAL of the MMF;

(d)details of the 10 largest holdings in the MMF, including the name, country, maturity and asset type, and the counterparty in the case of repurchase and reverse repurchase agreements;

(e)the total value of the assets of the MMF;

(f)the net yield of the MMF.

3.Any document of an MMF used for marketing purposes shall clearly include all of the following statements:

(a)that the MMF is not a guaranteed investment;

(b)that an investment in MMFs is different from an investment in deposits, with particular reference to the risk that the principal invested in an MMF is capable of fluctuation;

(c)that the MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share;

(d)that the risk of loss of the principal is to be borne by the investor.

4.No communication by the MMF or by the manager of an MMF to investors or potential investors shall in any way suggest that an investment in the units or shares of the MMF is guaranteed.

5.Investors in an MMF shall be clearly informed of the method or methods used by the MMF to value the assets of the MMF and calculate the NAV.

Public debt CNAV MMFs and LVNAV MMFs shall explain clearly to investors and potential investors any use of the amortised cost method or of rounding or both.

Article 37U.K. Reporting to [F105the FCA]

1.For each MMF that it manages, the manager of the MMF shall report information to the [F106FCA] on at least a quarterly basis.

By way of derogation from the first subparagraph, for an MMF whose assets under management in total do not exceed EUR 100 000 000, the manager of the MMF shall report to the [F106FCA] on at least an annual basis.

F107...

2.The information reported pursuant to paragraph 1 shall comprise the following points:

(a)the type and characteristics of the MMF;

(b)portfolio indicators such as the total value of assets, NAV, WAM, WAL, maturity breakdown, liquidity and yield;

(c)the results of stress tests and, where applicable, the proposed action plan;

(d)information on the assets held in the portfolio of the MMF, including:

(i)

the characteristics of each asset, such as name, country, issuer category, risk or maturity, and the outcome of the internal credit quality assessment procedure;

(ii)

the type of asset, including details of the counterparty in the case of derivatives, repurchase agreements or reverse repurchase agreements;

(e)information on the liabilities of the MMF, including:

(i)

the country where the investor is established;

(ii)

the investor category;

(iii)

subscription and redemption activity.

If necessary and duly justified, [F108the FCA] may solicit additional information.

3.In addition to the information referred to in paragraph 2, for each LVNAV MMF that it manages, the manager of an MMF shall report the following:

(a)every event in which the price of an asset valued by using the amortised cost method in accordance with the first subparagraph of Article 29(7) deviates from the price of that asset calculated in accordance with Article 29(2), (3) and (4) by more than 10 basis points;

(b)every event in which the constant NAV per unit or share calculated in accordance with Article 32(1) and (2) deviates from the NAV per unit or share calculated in accordance with Article 30 by more than 20 basis points;

(c)every event in which a situation mentioned in Article 34(3) occurs and the measures taken by the board in accordance with points (a) and (b) of Article 34(1).

4.[F109The FCA may make] technical standards to establish a reporting template that shall contain all the information referred to in paragraphs 2 and 3.

F110...

F1115.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

CHAPTER VIIIU.K.Supervision

Article 38U.K.Supervision by the [F112FCA]

1.The [F113FCA] shall supervise compliance with this Regulation on an ongoing basis.

2.The [F114FCA] shall be responsible for supervising compliance with Chapters II to VII.

3.The [F115FCA] shall be responsible for supervising compliance with the obligations set out in the fund rules or in the instruments of incorporation, and the obligations set out in the prospectus, which shall be consistent with this Regulation.

4.The [F116FCA] shall be responsible for supervising the adequacy of the arrangements and organisation of the manager of the MMF so that the manager of the MMF is in a position to comply with the obligations and rules which relate to the constitution and functioning of all the MMFs that it manages.

5.[F117Subject to paragraph 6, the FCA must monitor UCITS and AIFs established or marketed in the United Kingdom] to verify that they do not use the MMF designation or suggest that they are an MMF unless they comply with this Regulation.

[F1186.The FCA must monitor EEA UCITS and EEA AIFs marketed in the United Kingdom to verify that they do not use the MMF designation or suggest that they are an MMF unless they comply with the EU MMF Regulation.]

Textual Amendments

Article 39U.K.Powers of competent authorities

[F119Without prejudice to powers vested in the FCA under FSMA, the OEIC Regulations, and the AIFM Regulations, the FCA has all supervisory and investigatory powers that are necessary for the exercise of its functions with respect to this Regulation. In particular, it has the power to do all of the following:]

(a)

request access to any document in any form, and to receive or take a copy thereof;

(b)

require an MMF or the manager of an MMF to provide information without delay;

(c)

require information from any person related to the activities of an MMF or the manager of an MMF;

(d)

carry out on-site inspections with or without prior announcement;

(e)

take appropriate measures to ensure that an MMF or the manager of an MMF continues to comply with this Regulation;

(f)

issue an order to ensure that an MMF or the manager of an MMF complies with this Regulation and desists from a repetition of any conduct that could infringe this Regulation.

Textual Amendments

F120Article 40U.K.Penalties and other measures

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Article 41U.K.Specific measures

1.Without prejudice to powers vested in [F121the FCA under FSMA, the OEIC Regulations or the AIFM Regulations], as applicable, [F122the FCA] shall, while respecting the principle of proportionality, take the appropriate measures referred to in paragraph 2 where an MMF or the manager of an MMF:

(a)fails to comply with any of the requirements regarding asset composition, in infringement of Articles 9 to 16;

(b)fails to comply with any of the portfolio requirements, in infringement of Article 17, 18, 24 or 25;

(c)has obtained authorisation through false statements or any other irregular means, in infringement of Article 4 or 5;

(d)uses the designation ‘money market fund’, ‘MMF’ or of another designation that suggests that a UCITS or AIF is an MMF, in infringement of Article 6;

(e)fails to comply with any of the requirements regarding the internal credit quality assessment, in infringement of Article 19 or 20;

(f)fails to comply with any of the governance, documentation or transparency requirements, in infringement of Article 21, 23, 26, 27, 28 or 36;

(g)fails to comply with any of the requirements regarding valuation, in infringement of Article 29, 30, 31, 32, 33 or 34.

2.In the cases referred to in paragraph 1, the [F123FCA] shall, as appropriate:

(a)take measures to ensure that the MMF or the manager of an MMF concerned complies with the relevant provisions;

(b)withdraw an authorisation granted in accordance with Article 4 or 5.

Textual Amendments

F124Article 42U.K.Powers and competences of ESMA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F125Article 43U.K.Cooperation between authorities

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

CHAPTER IXU.K.Final provisions

F126Article 44U.K.Treatment of existing UCITS and AIFs

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F127Article 45U.K.Regulations

1. Any power to make regulations conferred on the Treasury by this Regulation is exercisable by statutory instrument.

2.Such regulations may—

(a)contain incidental, supplemental, consequential and transitional provision; and

(b)make different provision for different purposes.

3.A statutory instrument containing regulations made under this Regulation is subject to annulment in pursuance of a resolution of either House of Parliament.]

Textual Amendments

F128Article 46U.K.Review

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Article 47U.K.Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 21 July 2018, with the exception of Article 11(4), Article 15(7), Article 22 and Article 37(4) which shall apply from 20 July 2017.

F129...

Textual Amendments