Commission

Commission Publishes Proposals for a Regulation on MMFs

On September 4, a proposed Regulation on money market funds (MMFs) was published by the Commission, accompanied by a press release, impact assessment, FAQs and various other documents.  These can be found, along with further information, on a specialized webpage set up by the Commission.  The proposed Regulation’s purpose is to help MMFs, through enhancing their liquidity profile and stability, better withstand redemption pressure in stressed market conditions.

Among other things, the Regulation contains provisions on:

  • Prescribed levels of daily and weekly liquidity;
  • Clear labeling;
  • A capital bidder of 3% for constant net asset value funds;
  • Customer profiling policies; and
  • Requirements for the MMF manager regarding internal credit risk assessment.

The proposed Regulation and impact assessment are currently draft versions; the final text is due for publication soon.  The proposed Regulation will now go to the European Parliament and Council of the EU for consideration, and the Commission has stated that it expects the Regulation to be agreed upon in 2014.

ESMA Provides Technical Advice on the Level Two Implementation of the Alternative Investment Fund Managers Directive

On 16 November 2011, the European Securities and Markets Authority (“ESMA”) published its final advice to the European Commission (the “Commission”) on possible implementing measures under the Alternative Investment Fund Managers Directive (the “Directive”). Although ESMA’s advice is extensive (over 500 pages), there are some headline issues. There is growing industry concern that ESMA’s advice supports a “strict liability” approach towards depositaries for the acts and omissions of their sub-custodians. The industry is likely to welcome other elements of the advice including ESMA’s proposal that where portfolio or risk management is delegated to an entity outside the EU, that entity need not be subject to regulatory requirements which are identical to those under the Directive.

ESMA’s Technical advice can be read in full by clicking here.