Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. · Read the official text ↗
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 UCITS shall not be subject to the obligations concerning investment policies of UCITS laid down in Articles 49 to 50a, Article 51(2), and Articles 52 to 57 of Directive 2009/65/EC, unless explicitly specified otherwise in this Regulation.
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 Union, the national, regional and local administrations of 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 third country, 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 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. 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 in accordance with Article 50(2) of Directive 2009/65/EC.
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 point (a), (b), (c) or (h) of Article 50(1) of Directive 2009/65/EC; (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 Union, a central authority or central bank of a Member State, the European Central Bank, the European Investment Bank, the European Stability Mechanism or the European Financial Stability Facility.
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 ( 16 ) ; (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; (c) a simple, transparent and standardised (STS) securitisation or ABCP. 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. The Commission shall adopt, by 6 months from the date of entry into force of the proposed Regulation on STS securitisations, a delegated act in accordance with Article 45 amending this Article by introducing a cross-reference to the criteria identifying STS securitisations and ABCPs in the corresponding provisions of that Regulation. The amendment shall become effective at the latest by 6 months after the date of entry into force of that delegated act or from the date of application of the corresponding provisions in the proposed Regulation on STS securitisations, whichever is the later. 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.
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; (c) the credit institution has its registered office in a Member State or, where the credit institution has its registered office in a third country, it is subject to prudential rules considered equivalent to those laid down in Union law in accordance with the procedure laid down in Article 107(4) of Regulation (EU) No 575/2013.
Eligible financial derivative instruments
A financial derivative instrument shall be eligible for investment by an MMF provided it is dealt in on a regulated market as referred to in point (a), (b) or (c) of Article 50(1) of Directive 2009/65/EC 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 competent authority of the MMF; (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.
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) placed on deposits in accordance with point (f) of Article 50(1) of Directive 2009/65/EC; 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.
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 Union, a central authority or central bank of 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 third country, 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, in accordance with Article 13 of Regulation (EU) 2015/2365 of the European Parliament and of the Council ( 17 ) . 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 Commission shall be empowered to adopt delegated acts in accordance with Article 45 to supplement this Regulation by specifying 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. For those purposes, the Commission shall take into account the report referred to in Article 509(3) of Regulation (EU) No 575/2013. The Commission shall adopt the delegated act referred to in the first subparagraph no later than 21 January 2018.
Eligible units or shares of MMFs
1. An MMF may acquire the units or shares of any other 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. An MMF whose units or shares have been acquired 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, 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. 4. Units or shares of other 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; (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: (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 other 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 other 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 UCITS authorised in accordance with Article 4(2) may acquire units or shares in other MMFs in accordance with Article 55 or 58 of Directive 2009/65/EC 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.
Articles on this page are reproduced verbatim from official open data. See the attribution line.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.