[ParlTrack]

Proposal for a regulation
Recital 1

(1) Money market funds (MMF) provide short-term finance to financial institutions, corporates or governments. By providing finance to these entities, money market funds contribute to the financing of the European economy. Such entities use their investments in MMFs as an efficient way to spread their credit risk and exposure, rather than solely relying on bank deposits.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 10

(10) In the absence of a Regulation setting out rules on MMFs, diverging measures might continue to be adopted at national level, which would continue to cause significant distortions of competition resulting from important differences in essential investment protection standards. Diverging requirements on portfolio composition, eligible assets, their maturity, liquidity and diversification, as well as on credit quality of issuers of money market instruments lead to different levels of investor protection because of the different levels of risk attached to the investment proposition associated with a money market fund. The failure to adopt strict common rules applicable to MMFs in the internal market prevents uniform investor protection and gives investors different incentives to redeem their investments and thereby trigger a run. It is therefore essential to avoid contagion into the short term funding market and to the sponsors of the MMF which would largely put at risk the stability of the Union's financial market by adopting a uniform set of rulesIt is therefore essential to adopt a uniform set of rules in order to avoid contagion into the short term funding market and to the sponsors of the MMF which would largely put at risk the stability of the Union's financial market. In order to mitigate systemic risk, Constant Net Asset Value MMFs (CNAV MMFs) should only be operated in the Union as a (1) Government CNAV MMF, (2) Retail CNAV MMF or (3) a Low Volatility NAV MMF from the date of entry into force of this Regulation. All references in this Regulation to CNAV MMFs relate to Government CNAV MMFs, Retail CNAV MMFs and Low Volatility NAV MMFs unless otherwise specified. Existing CNAV MMFs may also choose to operate as variable net asset value MMFs (VNAV MMFs) instead.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Recital 22

(22) Money market instruments are transferable instruments normally dealt in on the money market, as treasury and local authority bills, certificates of deposits, commercial papers, certain types of high quality asset backed securities, bankers' acceptances or medium- or short-term notes. They should be eligible for investment by MMFs only insofar as they comply with maturity limits or in the case of asset backed securities are eligible as high quality assets according to the liquidity rules in part six of Regulation (EU) No 575/2013 and are considered by the MMF to be of high credit quality.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Recital 23

(23) Asset Backed Commercial Papers (ABCPs) should be considered eligible money market instruments to the extent that they respect additional requirements. Due to the fact that during the crisis certain securitisations were particularly unstable, it is necessary to impose maturity limits and quality criteria on the underlying assets. Not all categories of underlying assets should be eligible because some were more confronted to instability than others. For this reason the underlying assets should be exclusively composed of short-term debt instruments that have been issued by corporates in the course of their business activity, such as trade receivables. Instruments such as auto loans and leases, equipment leases, consumer loans, residential mortgage loans, credit card receivables or any other type of instrument linked to the acquisition or financing of services or goods by consumers should not be eligible. ESMA should be entrusted with drafting regulatory technical standards to be submitted for endorsement by the Commission with regard to the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt and the conditions and numerical thresholds determining when corporate debt is of high credit quality and liquid. Certain asset backed securities that are of major significance for the real economy should be considered eligible money market instruments to the extent that they are eligible as high quality liquid assets according to the liquidity rules in part six of Regulation (EU) No 575/2013, specified in the Commission delegated regulation (EU) No ... to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions based on Article 460 of Regulation (EU) No 575/2013. This shall apply for qualified high quality liquid asset backed securities comprising one of the following subcategories of securitised underlying assets as referred to in Article 13, para. 2 (g) in point (iii) or (iv) of the Commission delegated regulation (EU) No ... to supplement Regulation (EU) 575/2013, namely auto loans and/or auto leases to borrowers or lessees established or resident in a Member State as referred to in point (iv) or commercial loans, leases or credit facilities to undertakings established in a Member State to finance capital expenditures or business operations other than the acquisition or the development of commercial real estate as referred to in point (iii). The reference to certain subcategories of securitised underlying assets as referred to in the delegated regulation (EU) No ... to supplement Regulation (EU) 575/2013 is important to ensure a uniform definition of eligible underlying securitised assets for the purpose of the liquidity regulations for credit institutions and this regulation which in turn is of importance for the liquidity of such instruments to avoid impediments to real economy securitisations. Asset Backed Commercial Papers (ABCPs) should be considered eligible money market instruments to the extent that they respect additional requirements. Due to the fact that during the crisis certain securitisations were particularly unstable, it is necessary to impose quality criteria on the underlying assets. ESMA should be entrusted with drafting regulatory technical standards to be submitted for endorsement by the Commission with regard to the conditions determining when debt is of high credit quality.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 35

(35) In order to strengthen MMFs' ability to face redemptions and prevent MMFs assets from being liquidated at heavily discounted prices, MMFs should hold on an on-going basis a minimum amount of liquid assets that mature daily or weekly. To calculate the proportion of daily and weekly maturing assets, the legal redemption date of the asset should be used. The possibility for the manager to terminate a contract on a short term basis can be taken into consideration. For instance, if a reverse repurchase agreement can be terminated with a one day prior notice, it should count as a daily maturing asset. If the manager has the possibility to withdraw money from a deposit account with a one day prior notice, it can count as a daily maturing asset. Government securities may be included as daily maturing assets, where a MMF Manager has determined the government securities to be of high credit quality.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 39

(39) ~~It is important that~~To avoid the risk management of MMFs ~~not be~~being biased by short-term decisions influenced by the possible rating of the MMF~~. Therefore, it is necessary to prohibit a MMF or its manager from requesting that the MMF is rated by a credit rating agency in order to avoid that this~~, controls shall be put in place to ensure the fairness and transparency of any external credit rating of the MMF on which investors in the MMF may seek to rely. Where a MMF seeks an external rating this ~~used for marketing purposes. The MMF or its manager should also refrain from using alternative methods for obtaining a rating of the MMF~~will be subject to and carried out in accordance with the requirements of the national competent authority of the credit rating agency. Should the MMF be awarded an unsolicited external rating, either on the own initiative of the credit rating agency or following request by a third party that is independent of the MMF or the manager and which does not act on behalf of any of them, the MMF manager should refrain from relying on criteria that would be attached to that external rating. For ensuring appropriate liquidity management it is necessary that the MMFs establish sound policies and procedures to know their investors. The policies that the manager has to put in place should help understanding the MMF's investor base, to the extent that large redemptions could be anticipated. In order to avoid that the MMF faces sudden massive redemptions, particular attention should be paid to large investors representing a substantial portion of the MMF's assets, as with one investor representing more than the proportion of daily maturing assets. In this case the MMF should increase its proportion of daily maturing assets to the proportion of that investor. The manager should whenever possible look at the identity of the investors, even if they are represented by nominee accounts, portals or any other indirect buyer.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 41

(41) In order to reflect the actual value of assets, the use of marking to market should be the preferred method for valuing the assets of MMFs. A manager should not be allowed to use the marking to model valuation method when marking to market provides a reliable value of the asset, as the mark to model method is prone to provide less accurate valuation. Assets such as treasury and local authority bills, medium- or short-term notes are generally the ones that are expected to have a reliable marking to market. For valuing commercial papers or certificates of deposit, the manager should check if accurate pricing is provided by a secondary market. The buy- back price offered by the issuer should also be considered to represent a good estimate of the value of the commercial paper. ~~In all other cases t~~The manager should estimate the value, for example using market data such as yields on comparable issues and comparable issuers and/or use the internationally regarded amortised cost accounting method as set out under recognised international accounting standards.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 45

(45) In order to be able to absorb day-to- day fluctuations in the value of a CNAV MMF's assets and allow it to offer a constant NAV per unit or share, the CNAV MMF should have at all times a NAV buffer amounting to at least 3% of its assets. The NAV buffer should serve as an absorbing mechanism for maintaining the constant NAV. All differences between the constamitigate client redemptions in times of market stress, whereby investors have a real choice of being able to invest in a CNAV or VNAV MMF whilst ensuring that CNAV MMF managers perform their fiduciary duty in terms of treating all shareholders fairly, the CNAV MMF, other than a Government CNAV per unit or share and the NAV per unit or share should be neutralized by using the NAV buffer. During stressed market situations, when the differences can rapidly increase, a procedure should ensure that the whole chain of management is involved. This escalation procedure should permit the senior management to take rapid remedy acMMF, shall have in place provisions for liquidity fees and redemption gates to prevent significant redemptions in times of market stress and to prevent other investors being unfairly exposed to the prevailing market conditions.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 46

(46) A~~s a~~ CNAV MMF that ~~does not maintain the NAV buffer at the required level is not capable of sustaining a constant NAV per~~ cannot meet the minimum amounit o~~r share, it should be required to fluctuate the NAV an~~f weekly liquidity requirements should cease to be a CNAV MMF. Therefore, where despite the use of the ~~escalation procedure the amount of~~redemption gate, the CNAV ~~buffer remains for one month below the~~MMF has not been requpaired ~~3% by~~within 105 bausi~~s point~~ness days, the CNAV MMF should automatically convert into a ~~MMF that is not allowed to use amortised cost accounting or rounding to the nearest percentage point. If before the end of the one month allowed for the replenishment~~VNAV MMF or be liquidated. If a liquidity fee is implemented it may remain in place at least until the MMF meets the minimum weekly liquidity requirements. If a competent authority has justifiable reasons demonstrating the in~~capac~~ability of the CNAV MMF to ~~replenish the buffer, it should have the power to convert the CNAV MMF into a MMF other than a CNAV MMF. The NAV buffer is the only vehicle through which external support to a CNAV MMF can be provided~~meet certain conditions, such conditions to be determined by the competent authorities, it should have the power to request the MMF manager to either convert the CNAV MMF into a MMF other than a CNAV MMF or to liquidate the CNAV MMF.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 48

(48) Investors should be clearly informed, before they invest in a MMF, if the MMF is of a short-term nature or of a standard nature and if the MMF is of a CNAV type or not. In order to avoid misplaced expectations from the investor it must also be clearly stated in any marketing document that MMFs are not a guaranteed investment vehicle. CNAV MMFs should clearly explain to investors the ~~buffer mechanism they are applying to maintain the constant NAV per unit or share~~provisions for liquidity fees and redemption gates. Investors should clearly acknowledge their understanding of the risk of this investment product.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Recital 54

(54) ~~It is essential to carry out a review of this Regulation in order to assess the appropriateness of exempting certain CNAV MMFs that concentrate their investment portfolios on debt issu~~Debt issued or guaranteed by ~~the~~a Member States from the requirement to establish a capital buffer that amounts to at least 3 % of the total value of the CNAV MMF's assets. Therefore, during the three years after the entry into force of this Regulation, the Commission should analyse the experience acquired in applying this Regulation and the impacts on the different economic aspects attached to the MMFs. The debt issued or guaranteed by the Member States, by its local authorities, by a third country or by a public international body represents a distinct category of investment displaying specific credit and liquidity traits. In addition, as sovereign debt plays a vital role in financing the Member States~~. The Commission should evaluate the evolution of the market for sovereign debt issued or guaranteed by the Member States and the possibility to create~~ and in providing EU investors with a high quality and liquid pool of investable assets, a special framework for MMF that concentrate their investment policy on that type of debt should be created for Government CNAV MMFs, as defined in point (22 a) of Article 2.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 1 a (new)

Article 1a Types of CNAV MMF As from the date of the entry into force of this Regulation, CNAV MMFs shall operate in the Union only as a (1) Government CNAV MMF, (2) Retail CNAV MMF or (3) a Low Volatility NAV MMF. All references in this Regulation to CNAV MMFs relate to Government CNAV MMFs, Retail CNAV MMFs and Low Volatility NAV MMFs, unless otherwise specified.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 2 – paragraph 1 – point 7 a (new)

(7a) "high quality liquid asset backed security" means a qualified asset-backed security referred to in Article 12, para. 1(a) meeting the requirements laid down in Article 13 of the Commission delegated regulation (EU) No ... to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions based on Article 460 of Regulation (EU) No 575/2013 defined for a uniform specification to be eligible transferable assets of high liquidity and credit quality according to Article 416, para. 1(d) of Regulation (EU) No 575/2013;

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 2 – paragraph 1 – point 12 a (new)

(12a) "Retail CNAV MMF" means a CNAV MMF that is available for subscription only to charities, non-profit organisations, public authorities, public foundations and natural persons, including any account for which the ultimate beneficiary is a natural person;

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 2 – paragraph 1 – point 12 b (new)

(12b) "Low Volatility NAV MMF" means a MMF that is available for subscription to all investors but which: (a) is not permitted to utilise the amortised cost method of valuation for non-Government Securities with remaining maturities greater than 90 days and, (b) may not invest more than 25% of its NAV in non- Government Securities with remaining maturities greater than 90 days;

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 2 – paragraph 1 – point 22 a (new)

(22a) "Government CNAV MMF" means a CNAV MMF which within 12 months of the adoption of this Regulation invests 99.5% of its assets in Government Securities, as defined in point (22b) and is subject to the diversification requirements outlined in Article 14(6).

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 2 – paragraph 1 – point 22 b (new)

(22b) "Government Securities" means public debt instruments that are cash, government assets or reverse repos secured with government debt of any eligible sovereign, as determined by the manager of the MMF.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 3 – paragraph 7 a (new)

7 a. Without prejudice to Article 3, paragraph 1, a Member State shall not be required to authorise a CNAV MMF.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 9 – paragraph 1 – point b – point ii a (new)

(iia) it is eligible as high quality liquid asset backed security referred to in Article 2, paragraph 7(a).

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 9 – paragraph 2

2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 397 days or on a more frequent basis while either not having a residual maturity exceeding 2 years or being eligible as high quality liquid asset backed security referred to in Article 2, paragraph 7(a).

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 1

1. A securitisation shall be considered as eligible provided that all of the following conditions are met: (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (b) the underlying corporate debt is of high credit quality and liquid; (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less.deleted

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 1 a (new)

1 a. High quality liquid asset backed securities referred to in Article 2, paragraph 7 (a) shall be considered eligible provided that the underlying securitized assets consist of assets as referred to in Article 13, paragraph 2 (g) point (iii) or (iv) of Commission delegated regulation (EU) No... to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions based on Article 460 of Regulation (EU) No 575/2013.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 1 b (new)

1 b. Asset Backed Commercial Papers shall be considered as eligible provided that they are liquid and that the underlying exposures are of high credit quality.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1 – introductory part

For the purpose of a consistent application of paragraph 1, ESMA shall develop draft regulatory technical standards specifying: conditions determining when asset backed commercial papers are liquid and when the underlying debt is of high credit quality.

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1 – point a

~~(a) the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt;~~deleted

2015/01/12
Committee: ECON

Werner LANGEN, Brian HAYES, Pablo ZALBA BIDEGAIN

Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1 – point b

~~(b) conditions and numerical thresholds determining when corporate debt is of high credit quality and liquid.~~deleted

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 14 – paragraph 5 – introductory part

5. Notwithstanding the individual limits laid down in paragraphs 1 and 3, a MMF shall not combine, where this would lead to investment of more than 105% of its assets in a single body, any of the following:

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 14 – paragraph 5 a (new)

5 a. A MMF may not invest in unsecured paper issued by an affiliate of the manager of the MMF.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 15 – paragraph 1

1. A MMF may not hold more than 105% of the money market instruments issued by a single body.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 21 – paragraph 1 – point c

(c) at least 10% of its assets shall be comprised of daily maturing assets. For the purpose of this calculation, government debt or government agency securities may be included within the daily maturing assets, providing they may be sold for settlement on a 'same-day' basis. A short-term MMF shall not acquire any asset other than a daily maturing asset when such acquisition would result in the short-term MMF investing less than 10% of its portfolio in daily maturing assets;

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 21 – paragraph 1 – point d

(d) at least 230% of its assets shall be comprised of weekly maturing assets. A short-term MMF shall not acquire any asset other than a weekly maturing asset when such acquisition would result in the short-term MMF investing less than 230% of its portfolio in weekly maturing assets. For the purpose of this calculation, government debt or government agency securities may be included within the daily maturing assets, providing they may be sold for settlement within the next 5 business days.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 22 – paragraph 1 – point c

(c) at least 105% of its assets shall be comprised of daily maturing assets. A standard MMF shall not acquire any asset other than a daily maturing asset when such acquisition would result in the standard MMF investing less than 105% of its portfolio in daily maturing assets;

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 22 – paragraph 1 – point d

(d) at least 230% of its assets shall be comprised of weekly maturing assets. A standard MMF shall not acquire any asset other than a weekly maturing asset when such acquisition would result in the standard MMF investing less than 230% of its portfolio in weekly maturing assets.

2015/01/12
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 23 – paragraph 1

TWhere a MMF or the manager of ~~the~~a MMF s~~hall not solicit or finance a credit rating agency for rating the MMF~~eeks an external rating this will be subject to and carried out in accordance with the requirements of the national competent authority of the credit rating agency. Should the MMF be awarded an unsolicited external rating, either on the own initiative of the credit rating agency or following request by a third party that is independent of the MMF or the manager and which does not act on behalf of any of them, the MMF manager shall refrain from relying on criteria that would be attached to that external rating.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 25 – paragraph 2

2. In addition, in the case of CNAV 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~~, including the impact of the difference on the NAV buffer~~.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 26 – paragraph 3 – subparagraph 1

~~When marking to market the assets shall be valued at the more prudent side of bid and offer unless the institution can close out at mid-market.~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 26 – paragraph 3 – subparagraph 2 – introductory part

When marking to market only quality market data provided by recognised independent pricing vendors shall be used. The quality of the market data shall be assessed on the basis of all of the following factors:

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 26 – paragraph 4 – subparagraph 3

~~When marking to model, no valuation models based on amortised cost shall be used.~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 26 – paragraph 4 – subparagraph 3 a (new)

When marking to model, only pricing data from independent and recognised pricing vendors may be used and the model's pricing methodology should be subject to approval by the competent authority of the MMF.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 27 – paragraph 6

6. The difference between the constant NAV per unit or share and NAV per unit or share of a CNAV MMF shall be continuously monitored and its NAV per unit share ('shadow NAV') published daily on the website of the MMF.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 1

1. A MMF shall not use the amortised cost method for valuation, or advertise a constant NAV per unit or share, or round the constant NAV per unit or share to the nearest percentage point or its equivalent when the NAV is published in a currency unit unless it has been explicitly authorised as a CNAV MMF.deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point a

~~(a) it has established a NAV buffer in accordance with the requirements in Article 30;~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point b

~~(b) the competent authority of the CNAV MMF is satisfied with a detailed plan by the CNAV MMF specifying the modalities of the use of the buffer in accordance with Article 31;~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point c

~~(c) the competent authority of the CNAV MMF is satisfied with the CNAV MMF's arrangements to replenish the buffer and with the financial strength of the entity expected to fund the replenishment;~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point d

(d) the rules or instruments of incorporation of the CNAV MMF provide clear procedures for the conversion of the CNAV MMF into a ~~MMF that is not allowed to use the amortised cost accounting or the rounding methods~~VNAV MMF;

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point f

(f) the CNAV MMF has established clear and effective communication tools towards investors that ensure prompt information in relation to any ~~use or replenishment of the NAV buffer and the~~ conversion of the CNAV MMF;

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 – point g

~~(g) the rules or instruments of incorporation of the CNAV MMF state clearly that the CNAV MMF cannot receive external support other than through the NAV buffer.~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 29 – paragraph 2 a (new)

2a. The manager of a CNAV MMF, other than a Government CNAV MMF, shall establish, implement and consistently apply a prudent, rigorous, systematic and continuous internal assessment procedure for determining the weekly liquidity thresholds applicable to the CNAV MMF. In managing the weekly liquidity thresholds, the following procedures shall apply: (a) Whenever the proportion of weekly maturing assets falls below 30% of the total assets of the CNAV MMF, the manager and the board of the CNAV MMF shall comply with the following: The Manager shall immediately inform the board of the CNAV MMF. The board of the CNAV MMF will be obliged to undertake a documented assessment of the situation to determine the appropriate course of action taking into account the interests of the investors in the CNAV MMF 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 CNAV 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 which limit the amount of shares or units to be redeemed on any one business day to 10% of the shares or units in the CNAV MMF for any period up to 15 business days; (iii) suspension of redemptions for any period up to 15 business days; or (iv) take no immediate action. (b) Whenever the proportion of weekly maturing assets falls below 10% of the total assets of the CNAV MMF, the manager and the board of the CNAV MMF shall comply with the following: The manager shall immediately inform the board of the CNAV MMF. The board of the CNAV MMF will be obliged to undertake a documented assessment of the situation to determine the appropriate course of action taking into account the interests of the investors in the CNAV MMF and shall decide whether to apply one or more of the following measures: (i) liquidity fees on redemptions (as set forth in Article 29.3(a)(i)); or (ii) a suspension of redemptions for a period of up to 15 days; provided that the board may not impose a suspension for more than 15 business days in any 90 day period without triggering a conversion as contemplated in Article 29.4. (c) After the board of the CNAV MMF has determined its course of action in each of (a) and (b) above, it shall promptly provide details of its decision to the competent authority of the CNAV MMF. (d) The liquidity fees and redemption gates measures set forth in Article 29.3 shall not apply to Government CNAV MMFs.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 30

~~[...]~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 31

1. The NAV buffer shall only be used in case of subscriptions and redemptions to equalise the difference between the constant NAV per unit or share and the NAV per unit or share. 2. For the purposes of paragraph 1, in case of subscriptions: (a) where the constant NAV at which a unit or share is subscribed is higher than the NAV per unit or share, the positive difference shall be credited to the reserve account; (b) where the constant NAV at which a unit or share is subscribed is lower than the NAV, the negative difference shall be debited from the reserve account. 3. For the purposes of paragraph 1, in case of redemptions: (a) where the constant NAV at which a unit or share is redeemed is higher than the NAV per unit or share, the negative difference shall be debited from the reserve account; (b) where the constant NAV at which a unit or share is redeemed is lower than the NAV per unit or share, the positive difference shall be credited to the reserve account.Article 31 deleted Use of the NAV buffer

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 33

1. Whenever the amount of the NAV buffer falls below 3% it shall be replenished. 2.When the NAV buffer has not been replenished and for one month the amount of the NAV buffer stays below the 3% referred to in Article 30(1) by 10 basis points the MMF shall automatically cease to be a CNAV MMF and be prohibited from using the amortised cost or rounding methods. The CNAV MMF shall inform immediately each investor thereof in writing and in a clear and comprehensible way.Article 33 deleted Replenishment of the NAV buffer

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 34

Powers of the competent authority concerning the NAV buffer 1. The competent authority of the CNAV MMF shall be immediately notified of any decrease below 3% in the amount of the NAV buffer. 2. The competent authority of the CNAV MMF and ESMA shall be immediately notified when the amount of the NAV buffer decreases by 10 basis points below the 3% referred to in Article 30(1). 3. Following the notification referred to in paragraph 1, the competent authority shall closely monitor the CNAV MMF. 4. Following the notification in paragraph 2, the competent authority shall control that the NAV buffer has been replenished or the MMF has ceased to hold itself as a CNAV MMF and informed accordingly its investors.Article 34 deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 35 – paragraph 1

1. A CNAV MMF may not receive external support ~~other than in the form and under the condition~~as laid down in Articles 3~~0 to 34~~5 (3).

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 37 – paragraph 2 – point c a (new)

(ca) that investors can obtain information on the investment portfolio and the liquidity levels of the MMF on the website of the MMF.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 37 – paragraph 2 a (new)

2a. A MMF shall provide to investors on its website, and update at least weekly, - the liquidity levels of the fund, - the weighted average maturity (WAM) and weighted average life (WAL) of the MMF, - the portfolio of investments of the MMF.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 37 – paragraph 5

5. In addition to the information to be provided in accordance with paragraphs 1 to 4, a CNAV MMF shall explain clearly to investors and potential investors the use of the amortised cost method and/or of rounding. A CNAV MMF shall indicate the amount of its NAV buffer, the procedure to equalise the constant NAV per unit or share and the NAV per unit or share and shall state clearly the role of the buffer and the risks related to it. The CNAV MMF shall clearly indicate the modalities of replenishing the NAV buffer and the entity expected to fund the replenishment. It shall make available to investors all information concerning compliance with the conditions set out in Article 29(2)(a) to (g)procedure to apply liquidity fees and redemption gates and the circumstance under which these will be triggered.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 38 – paragraph 2 – subparagraph 1 – point c

~~(c) the size and the evolution of the NAV buffer;~~deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 43 – paragraph 1

1. Within the ~~six~~24 months following the date of entry into force of this Regulation, an existing UCITS or AIF that invests in short term assets and has as distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment shall submit an application to its competent authority together with all documents and evidence necessary to demonstrate the compliance with this Regulation.

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 43 – paragraph 3

3. By way of derogation from the first sentence of Article 30(1), an existing UCITS or AIF that meets the criteria for the definition of a CNAV MMF set out in Article 2(10) shall establish a NAV buffer of at least (a) 1% of the total value of the CNAV MMF's assets, within one year from the entry into force of this Regulation; (b) 2% of the total value of the CNAV MMF's assets, within two years from the entry into force of this Regulation; (c) 3% of the total value of the CNAV MMF's assets, within three years from the date of entry into force of this Regulationdeleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 43 – paragraph 4

4. For the purposes of paragraph 3 of this Article, the reference to 3% in Articles 33 and 34 shall be interpreted as referring to the amounts of the NAV buffer mentioned in points (a), (b) and (c) of paragraph 3 respectively.deleted

2015/01/09
Committee: ECON

Brian HAYES

Proposal for a regulation
Article 45 – paragraph 1 – introductory part

By three years after the entry into force of this Regulation, the Commission shall review the adequacy of this Regulation from a prudential and economic point of view. In particular the review shall consider the operation of the CNAV buffer and the operation of the CNAV buffer to those CNAV MMFs that, in future, might concentrate their portfolios on debt issued or guaranteed by the Member States. The review shall:

2015/01/09
Committee: ECON

Activities of Brian HAYES related to 2013/0306(COD)

Plenary speeches (3)

Shadow reports (1)

Amendments (61)

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