EP approves MMFs Regulation: EP has approved the draft Money Market Funds (MMFs) Regulation. Key elements of the version of the Regulation are:

  • limiting constant net asset value (CNAV) MMFs to two types: retail CNAV available for subscription only for charities, not-for-profit organisations, public authorities and public foundations; and public debt CNAV, which would invest 99.5% of assets in public debt instruments;
  • introducing a new type of MMF, the Low Volatility Net Asset Value (LVNAV) MMF, which might display a constant net asset value but under strict conditions;
  • a requirement that MMFs diversify their portfolios, investing in higher-quality assets, follow strict liquidity and concentration requirements and have in place sound stress testing processes;
  • a requirement that public debt and retail CNAVs and LVNAVs apply "liquidity fees" "redemption gates" in certain circumstances to help stem sudden outflows;
  • a requirement that MMFs report weekly all of the following information to their investors:
    • the liquidity profile;
    • the credit profile and portfolio composition;
    • weighted average maturity (WAM) of the portfolio;
    • weighted average life (WAL) of the portfolio; and
    • concentration of the top five investors in the MMF.

The vote consolidated EP's position in preparation for three-way discussions on the draft with Member States and the Commission. (Source: Making Money Market Funds More Resilient to Financial Crises)