Activities of Miguel VIEGAS related to 2013/0306(COD)
Plenary speeches (2)
Money market funds (debate) PT
Money market funds (A8-0041/2015 - Neena Gill) PT
Amendments (53)
Amendment 98 #
Proposal for a regulation
Recital 1
Recital 1
(1) Money market funds (MMF) provide, similar to banks and other financial institutions, 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.
Amendment 100 #
Proposal for a regulation
Recital 2 a (new)
Recital 2 a (new)
(2a) They can be considered part of the Shadow Banking System on the basis that they perform maturity and liquidity transformation. However, in contrast with bank deposits, MMFs do not have access to official support and backstop facilities, and, whereas they have little ability to absorb losses, they also do not have explicit support from sponsor companies. Moreover, investors may perceive MMFs, in particular constant net asset value (CNAV) funds that seek to maintain an unchanging face value, as safe alternatives to bank deposits.
Amendment 106 #
Proposal for a regulation
Recital 4
Recital 4
(4) Large redemption requests force MMFs to sell some of their investment assets in a declining market, fuelling a liquidity crisis. In these circumstances, money market issuers can face severe funding difficulties if the market of commercial papers and other money market instruments dries up. Any contagion to the short term funding market could then also represent direct and major difficulties for the financing of the financial institutions, corporations and governments, thus the economy. In the absence of a credible solution to the too- big-too fail problem for banks this has major implications from an economic stability point of view.
Amendment 109 #
Proposal for a regulation
Recital 6
Recital 6
(6) In order to preserve the integrity and stability of the internal marketduce systemic risk and the possibility of public bail-outs by promoting more resilient MMFs and limiting contagion channels, it is necessary to lay down rules regarding the operation of MMFs, in particular on the composition of the portfolio of MMFs. Uniform rules across the Union are necessary to ensure that MMFs are able to immediately redeem investors, especially during stressed market situations. Uniform rules on the portfolio of a money market fund are also required to ensure that MMFs are able to face massive and sudden redemption requests by a large group of investors.
Amendment 122 #
Proposal for a regulation
Recital 23
Recital 23
(23) Asset Backed Commercial Papers (ABCPs) should not 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, due to the fact that these instruments have proven to be particularly unstable and intransparent.
Amendment 133 #
Proposal for a regulation
Recital 27
Recital 27
(27) In order to limit risk-taking by MMFs it is essential to reduce counterparty risk by subjecting the portfolio of MMFs to clear diversification requirements. To this effect it is also necessary that the reverse repurchase agreements be fully collateralized and that, for limiting the operational risk, one reverse repurchase agreement counterparty cannot account for more than 20% of the MMF's assets. All over-the-counter (OTC) derivatives should be subject to Regulation (EU) No 648/20125. Over-the-counter (OTC) derivatives should not be eligible. __________________ 5 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).
Amendment 162 #
Proposal for a regulation
Recital 42 a (new)
Recital 42 a (new)
(42a) The financial crisis is evidence of the fact that the conduct and nature of constant net asset value MMFs make them more vulnerable to destabilising investor runs, which can spread quickly among funds, impairing liquidity and the availability of short-term credit, in particular for banks. Against this background, CNAV MMF should not be offered to retail investors.
Amendment 167 #
Proposal for a regulation
Recital 43
Recital 43
(43) To allow for the specificities of CNAV MMFs it is necessary that CNAV MMFs, until they have been fully converted into VNAV MMFs, be permitted to use also the amortised cost accounting method for the purpose of determining the constant net asset value (NAV) per unit or share, subject to the agreement of national competent authorities. This notwithstanding, for the purpose of ensuring at all times the monitoring of the difference between the constant NAV per unit or share and the NAV per unit or share, a CNAV MMF should also calculate the value of its assets on the basis of the marking to market or marking to model methods.
Amendment 171 #
Proposal for a regulation
Recital 44
Recital 44
(44) As a MMF should publish a NAV that reflects all movements in the value of its assets, the published NAV should be rounded at maximum to the nearest basis point or its equivalent. As a consequence, when the NAV is published in a specific currency, for example €1, the incremental change in value should be done every €0.0001. In the case of a NAV at €100, the incremental change in value should be done every €0.01. Only if the MMF is a CNAV MMF, the MMF can publish a price that does not follow entirely the movements in the value of its assets. In this case the NAV can be rounded to the nearest cent for a NAV at €1 (every €0.01 move) for an interim period of five years.
Amendment 185 #
Proposal for a regulation
Recital 45 a (new)
Recital 45 a (new)
(45a) In addition to NAV buffers, MMFs should impose redemption fees of up to 3% in case the weekly maturing assets fall below 15% of the fund's total assets at the end of any business day.
Amendment 194 #
Proposal for a regulation
Recital 46 a (new)
Recital 46 a (new)
(46a) After a transitional phase of five years after publication of this regulation in the Official Journal all CNAV MMFs should be converted into VNAV MMFs.
Amendment 196 #
Proposal for a regulation
Recital 47
Recital 47
(47) External support provided to a MMF other than a CNAV MMF with the intention of ensuring either liquidity or stability of the MMF or de facto having such effects increases the contagion risk between the MMF sector and the rest of the financial sector. Third parties providing such support have an interest in doing so, either because they have an economic interest in the management company managing the MMF or because they want to avoid any reputational damage should their name be associated with the failure of a MMF. Because these third parties do not commit explicitly to providing or guaranteeing the support, there is uncertainty whether such support will be granted when the MMF needs it. In these circumstances, the discretionary nature of sponsor support contributes to uncertainty among market participants about who will bear losses of the MMF when they do occur. This uncertainty likely makes MMFs even more vulnerable to runs during periods of financial instability, when broader financial risks are most pronounced and when concerns arise about the health of the sponsors and their ability to provide support to affiliated MMFs. For these reasons, MMFs should not rely on external support in order to maintain their liquidity and the stability of their NAV per unit or share unless the competent authority of the MMF has specifically allowed the external support in order to maintain stability of financial markets.
Amendment 209 #
Proposal for a regulation
Recital 48
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. They should further explain to investors that they may impose redemption fees in case the weekly maturing assets fall below a specific threshold.
Amendment 223 #
Proposal for a regulation
Recital 54
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 issued by the 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 or the mandatory convergence into VNAV MMFs. 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 represents a distinct category of investment displaying specific credit and liquidity traits. In addition, 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 a special framework for MMF that concentrate their investment policy on that type of debt.
Amendment 226 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Amendment 238 #
Proposal for a regulation
Article 2 – paragraph 1 – point 11
Article 2 – paragraph 1 – point 11
(11) ‘amortised cost method’ means a valuation method which takes the acquisition cost of an asset and adjusts this value for amortisation of premiums (or discounts) until maturity; the use of this accounting method shall be subject to approval of national competent authorities;
Amendment 263 #
Proposal for a regulation
Article 3 – paragraph 1 – subparagraph 1 a (new)
Article 3 – paragraph 1 – subparagraph 1 a (new)
An MMF or an MMF manager may be established in a third country provided that the third country is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre.
Amendment 270 #
Proposal for a regulation
Article 4 – paragraph 1 – subparagraph 1 a (new)
Article 4 – paragraph 1 – subparagraph 1 a (new)
An AIF MMF or an AIFM of a MMF may be established in a third country provided that the third country is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre.
Amendment 280 #
Proposal for a regulation
Article 8 – paragraph 1 – point c
Article 8 – paragraph 1 – point c
(c) financial derivative instruments used exclusively for hedging purposes;
Amendment 300 #
Proposal for a regulation
Article 9 – paragraph 1 – point d
Article 9 – paragraph 1 – point d
Amendment 307 #
Proposal for a regulation
Article 10 – paragraph 1 – introductory part
Article 10 – paragraph 1 – introductory part
1. A securitisation shall not be considered as eligible provided that all of the following conditions are met:.
Amendment 309 #
Proposal for a regulation
Article 10 – paragraph 1 – point a
Article 10 – paragraph 1 – point a
Amendment 313 #
Proposal for a regulation
Article 10 – paragraph 1 – point b
Article 10 – paragraph 1 – point b
Amendment 316 #
Proposal for a regulation
Article 10 – paragraph 1 – point c
Article 10 – paragraph 1 – point c
Amendment 323 #
Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1
Article 10 – paragraph 2 – subparagraph 1
Amendment 335 #
Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 2
Article 10 – paragraph 2 – subparagraph 2
Amendment 337 #
Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 3
Article 10 – paragraph 2 – subparagraph 3
Amendment 343 #
Proposal for a regulation
Article 12 – paragraph 1 – introductory part
Article 12 – paragraph 1 – introductory part
A financial derivative instrument shall be eligible for investment by a MMF if it is dealt in on a regulated market referred to in Article 50(1)(a), (b) or (c) of Directive 2009/65/EC or over-the-counter (OTC) , provided that all of the following conditions are in any case fulfilled:
Amendment 346 #
Proposal for a regulation
Article 12 – paragraph 1 – point c
Article 12 – paragraph 1 – point c
(c) the counterparties to OTC derivative transactions are institutions subject to prudential regulation and supervision and belonging to the categories approved by the competent authorities of the MMF's home Member State;
Amendment 349 #
Proposal for a regulation
Article 12 – paragraph 1 – point d
Article 12 – paragraph 1 – point d
(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.
Amendment 352 #
Proposal for a regulation
Article 13 – paragraph 3
Article 13 – paragraph 3
3. Securitisations as defined in Article 10 shall not be received by the MMF as part of a reverse repurchase agreement. The assets received by the MMF as part of a reverse repurchase agreement shall not be sold, reinvested, pledged or otherwise transferred.
Amendment 367 #
Proposal for a regulation
Article 14 – paragraph 2
Article 14 – paragraph 2
Amendment 372 #
Proposal for a regulation
Article 14 – paragraph 3
Article 14 – paragraph 3
3. The aggregate risk exposure to the same counterparty of the MMF stemming from OTC derivative transactions shall not exceed 5% of its assets.
Amendment 382 #
Proposal for a regulation
Article 14 – paragraph 5 – point c
Article 14 – paragraph 5 – point c
(c) OTC financial derivative instruments giving counterparty risk exposure to that body.
Amendment 396 #
Proposal for a regulation
Article 15 – paragraph 2
Article 15 – paragraph 2
2. The limit laid down in paragraph 1 shall not apply in respect of holdings of money market instruments issued or guaranteed by a central, regional or local public authority or central bank of a Member State, the European Central Bank, the Union, the European stability mechanism or the European Investment Bank, or a central authority or central bank of a third country, or the public international body to which one or more Member States belongs.
Amendment 413 #
Proposal for a regulation
Article 16 – paragraph 3 – point e
Article 16 – paragraph 3 – point e
(e) assignment methodologies shall be reviewed at least annuallytwice a year to determine whether they remain appropriate for the current portfolio and external conditions;
Amendment 449 #
Proposal for a regulation
Article 22 – paragraph 1 – point c
Article 22 – paragraph 1 – point c
(c) at least 120% 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 120% of its portfolio in daily maturing assets;
Amendment 453 #
Proposal for a regulation
Article 22 – paragraph 1 – point d
Article 22 – paragraph 1 – point d
(d) at least 240% 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 240% of its portfolio in weekly maturing assets.
Amendment 509 #
Proposal for a regulation
Article 25 – paragraph 4
Article 25 – paragraph 4
4. Stress tests shall be conducted at a frequency determined by the board of directors of the manager of the 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 yearsix- monthly.
Amendment 525 #
Proposal for a regulation
Article 26 – paragraph 5
Article 26 – paragraph 5
5. In addition to the marking to market method referred to in paragraphs 2 and 3 and marking to model method referred to in paragraph 4, the assets of a CNAV MMF exceptionally may also be valued by using the amortised cost method. Amortised cost accounting shall be applied only when all of the following conditions have been fulfilled: (a) national competent authorities have accepted this accounting method; (b) it is deemed to allow for an appropriate approximation of the price of the instrument. The use of amortisation shall be restricted to instruments with low residual maturity and in the absence of any particular sensitivity of the instruments to market factors. A residual maturity of 60 days shall be considered to be the maximum. Materiality thresholds and escalation procedures shall be in place to ensure that corrective actions are promptly taken when the amortised cost no longer provides a reliable approximation of the price of the instruments: at the level of the overall portfolio, thresholds of 10 basis points shall be deemed to be appropriate.
Amendment 584 #
Proposal for a regulation
Article 29 – paragraph 2 – point b
Article 29 – paragraph 2 – point b
(b) the competent authority of the CNAV MMF, after consultation with ESMA, is satisfied with a detailed plan by the CNAV MMF specifying the modalities of the use of the buffer in accordance with Article 31;
Amendment 602 #
Proposal for a regulation
Article 29 – paragraph 2 – point g a (new)
Article 29 – paragraph 2 – point g a (new)
(ga) it shall not be offered to retail investors as defined in Article 4 (11) of Directive 2014/64/EU [MIFID II].
Amendment 603 #
Proposal for a regulation
Article 29 – paragraph 2 a (new)
Article 29 – paragraph 2 a (new)
2a. If the weekly maturing assets of a CNAV MMF fall below 15% of the fund's total assets at the end of any business day, the MMF shall impose a redemption fee to investors redeeming their shares of up to 3%. Any fee imposed would be lifted automatically once the MMF's level of weekly liquidity returns to 30% of its total assets.
Amendment 619 #
Proposal for a regulation
Article 30 – paragraph 1 – subparagraph 1
Article 30 – paragraph 1 – subparagraph 1
Each CNAV MMF shall establish and maintain a NAV buffer amounting at all times to at least 3% of the total value of the CNAV MMF's assets. The total value of the CNAV MMF's assets shall be calculated as the sum of the values of each asset of the MMF determined in accordance with Article 26(3) or (4). By [OJ please insert date: five years after entry into force of this Regulation], all CNAV MMF established, managed or marketed in the Union shall be converted into VNAV MMF.
Amendment 662 #
Proposal for a regulation
Article 33 – paragraph 2 – subparagraph 2
Article 33 – paragraph 2 – subparagraph 2
The CNAV MMF shall inform immediately the competent authority and ESMA as well as each investor thereof in writing and in a clear and comprehensible way.
Amendment 686 #
Proposal for a regulation
Article 35 – paragraph 1
Article 35 – paragraph 1
1. A CNAV MMF may not receive external support other than in the form and under the conditions laid down in Articles 30 to 34.
Amendment 689 #
Proposal for a regulation
Article 35 – paragraph 2
Article 35 – paragraph 2
Amendment 695 #
Proposal for a regulation
Article 35 – paragraph 3
Article 35 – paragraph 3
Amendment 704 #
Proposal for a regulation
Article 36
Article 36
Amendment 730 #
Proposal for a regulation
Article 37 – paragraph 5 a (new)
Article 37 – paragraph 5 a (new)
5a. All of the information referred to in the preceding paragraphs shall be posted on the MMF website. The information, with particular reference to the fund’s investment portfolio and liquidity levels, shall be updated weekly.
Amendment 772 #
Proposal for a regulation
Article 43 – paragraph 3
Article 43 – paragraph 3
Amendment 788 #
Proposal for a regulation
Article 43 – paragraph 4
Article 43 – paragraph 4
Amendment 796 #
Proposal for a regulation
Article 45 – paragraph 1 – introductory part
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 as well as the mandatory conversion into VNAVs for those funds. The review shall: