Activities of Philippe DE BACKER related to 2013/0306(COD)
Plenary speeches (1)
Money market funds (A8-0041/2015 - Neena Gill)
Amendments (24)
Amendment 125 #
Proposal for a regulation
Recital 23
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 eligibl and also to ensure that the pool of exposures is sufficiently diversified. Yet not all categories of underlying assets have proved to be unstable, and in particular those bsecause some were more confronted to instability than othersuritizations where the underlying assets were associated with supporting the working capital of manufacturers and the sales of real economy goods and services. These securitizations have performed well and should be eligible. For this reason the underlying assets should be exclusively composed of short- term and liquid 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. ESMAundergo a thorough examination. ESMA, in close cooperation with the EBA, 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, whether it is sufficiently diversified, as well as the numerical thresholds determining when corporate debt is of high credit quality and liquid. In order to assess the eligibility of certain instruments and their underlying assets, ESMA shall develop, in close cooperation with EBA, a set of criteria to define "high quality securitization". These criteria should take into consideration the need for more standardisation and transparency to avoid securitisation of high complexity.
Amendment 138 #
Proposal for a regulation
Recital 29
Recital 29
(29) The MMF should have a responsibility to invest in high quality eligible assets. Therefore, a MMF should have a prudent and rigorous internalcredit assessment procedure for determining the credit quality of the money market instruments in which it intends to invest. In accordance with Union legislation limiting over-reliance on credit ratings, it is important that MMFs avoid any mechanisticover- reliance on ratings issued by rating agencies when assessing the quality of eligible assets. For this purpose the MMF should establish an internal rating system based on a harmonised rating scale and an internal assessment procedure.
Amendment 142 #
Proposal for a regulation
Recital 30
Recital 30
(30) For the purpose of avoiding that MMF managers use different assessment criteria for evaluating the credit risk of a money market instrument and thus attribute different risk characteristics to the same instrument, it is essential that managers rely on the same criteria. To this effect the ratingcredit assessment criteria should be precisely defined and harmonized. Examples of internal ratingcredit assessment criteria are quantitative measures on the issuer of the instrument, such as financial ratios, balance sheet dynamics, profitability guidelines, which are evaluated and compared to those of industry peers and groups; qualitative measures on the issuer of the instrument, such as management effectiveness, corporate strategy, which are analysed with a view to determining that the issuer's overall strategy does not impede on its future credit quality. The highest internal ratings should reflect the fact that the creditworthiness of the issuer of the instruments is maintained at all times at the highest possible levels.
Amendment 145 #
Proposal for a regulation
Recital 31
Recital 31
(31) In order to develop a transparent and coherent internal rating systemcredit assessment procedure, the manager should document the procedures used for the internalcredit assessment. This should ensure that the procedure follows a clear set of rules that can be monitored and that the methodologies employed are communicated upon request to the interested stakeholders.
Amendment 151 #
Proposal for a regulation
Recital 39
Recital 39
(39) It is important that the risk management of MMFs not be biased by short-term decisions influenced by the possible ratAn effect of the financial crisis has been an over-reliance by investors, UCITS and AIFs on credit rating agencies in assessing 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 external rating is used for marketing purposes. The MMF or its manager should also refrain from using alternative methods for obtaining acredit worthiness of potential investments. In order to improve the quality of the investments made by MMFs, and thereby UCITS and AIFs, and in order to protect investors of those funds, it is appropriate to require MMF managers and investors to avoid relying solely or mechanically on credit ratings of the MMF. Should the MMF be awarded an 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 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 ratingr using them as the only parameter when assessing the risk involved in the investments made by MMFs. The general principle against over-reliance on credit ratings should therefore be integrated into the risk-management processes and systems of MMFs and adapted to their specificities. 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. In order to specify further the general principle against over- reliance on credit ratings, as introduced in this Regulation, ESMA should develop draft regulatory technical standards to ensure that MMF managers and investors consult other sources, such as internal assessment results, and do not rely solely on credit ratings when assessing the creditworthiness of the assets held. It is appropriate in this regard for ESMA to develop draft regulatory technical standards in respect of the general provisions regarding risk-management processes and systems employed by MMF managers and investors. The Commission should adopt those draft regulatory technical standards in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Amendment 187 #
Proposal for a regulation
Recital 46
Recital 46
Amendment 219 #
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. Therefore, during the three years after the entry into force of this Regulation,During the three years after the entry into force of this Regulation, it is essential that the Commission should analyses 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 debtis review should focus on the effect on the real economy and financial stability of the changes required by this Regulation.
Amendment 236 #
Proposal for a regulation
Article 2 – paragraph 1 – point 8
Article 2 – paragraph 1 – point 8
(8) ‘corporate debt’ means debt instruments issued by an undertakings which is effectively engaged in producing or trading inand/or financing the manufacturing, trading or providing of goods orand non- financial services to the market. For the purpose of this definition, it should be understood, that debt instrument such as trade receivables, auto loans and leases, equipment loans and leases, SME loans of such undertakings are eligible provided they otherwise comply with the conditions set out in this Regulation;
Amendment 362 #
Proposal for a regulation
Article 14 – paragraph 1 – introductory part
Article 14 – paragraph 1 – introductory part
1. A MMF shall invest no more than 510% of its assets in any of the following:
Amendment 378 #
Proposal for a regulation
Article 14 – paragraph 5 – introductory part
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:.
Amendment 407 #
Proposal for a regulation
Article 16 – paragraph 3 – point c
Article 16 – paragraph 3 – point c
(c) a manager of a MMF shall monitor its assignments of internal ratingsinternal assessment procedure on an ongoing basis and review all assignments of internal rating at least annuallycredit assessments every 6 months. That manager shall review theconsider its internal assignessment every time there is a material change that could have an impact on an internal credit ratingthe credit assessment. The manager shall establish internal arrangements to monitor the impact on its internal credit ratingsassessment of changes in macroeconomic, financial market or issuer specific conditions;
Amendment 439 #
Proposal for a regulation
Article 21 – paragraph 1 – point d
Article 21 – paragraph 1 – point d
(d) at least 20% of its assets shall be comprised of up to 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 20% of its portfolio in weekly maturing assets.
Amendment 456 #
Proposal for a regulation
Article 22 – paragraph 1 – point d
Article 22 – paragraph 1 – point d
(d) at least 2015% of its assets shall be comprised of up to 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 2015% of its portfolio in weekly maturing assets.
Amendment 475 #
Proposal for a regulation
Article 23 – paragraph 1
Article 23 – paragraph 1
The MMF or the manager of the MMF shall not solicit or finance a credit rating agency for rating the MMFrisk management of MMF may not be affected by short-term decisions influenced by the possible rating of the MMF. Where a MMF seeks an external rating, this shall be subject to, and carried out in accordance with, the requirements of the national competent authority of the credit rating agency. A MMF manager shall not rely on the criteria attached to the external credit rating.
Amendment 560 #
Proposal for a regulation
Article 29
Article 29
Additional requirements for CNAV 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. 2. A CNAV MMF shall satisfy all the following additional requirements: (a) it has established a NAV buffer in accordance with the requirements in Article 30; (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; (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; (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; (e) the CNAV MMF and its manager have clear and transparent governance structures that unambiguously identify and assign responsibilities for the different governance levels; (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; (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.rticle 29 deleted MMFs
Amendment 606 #
Proposal for a regulation
Article 29 a (new)
Article 29 a (new)
Article 29 a A CNAV MMF shall have in place redemption gate and/or fee provisions. The CNAV MMF board or management company shall decide whether to implement redemption gates and/or fees once a trigger is breached. The redemption fee should be set to ensure that remaining shareholders do not suffer the liquidity costs of redeeming shareholders. If the redemption gate and/or fee have not repaired the CNAV MMF within 30 days, the CNAV MMF shall convert to a VNAV MMF or be liquidated. ESMA shall determine the nature of the trigger for redemption gates and/or fees and the calculation of the redemption fee.
Amendment 611 #
Proposal for a regulation
Article 30
Article 30
Amendment 639 #
Proposal for a regulation
Article 31
Article 31
Amendment 655 #
Proposal for a regulation
Article 33
Article 33
Amendment 667 #
Proposal for a regulation
Article 34
Article 34
Amendment 738 #
Proposal for a regulation
Article 38 – paragraph 2 – subparagraph 1 – point c
Article 38 – paragraph 2 – subparagraph 1 – point c
Amendment 768 #
Proposal for a regulation
Article 43 – paragraph 3
Article 43 – paragraph 3
Amendment 793 #
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. The review shall:
Amendment 799 #
Proposal for a regulation
Article 45 – paragraph 1 – point e a (new)
Article 45 – paragraph 1 – point e a (new)
(ea) Analyse the impact on the real economy and financial stability of the changes required by this Regulation.