BETA

60 Amendments of Marco ZANNI related to 2013/0306(COD)

Marco VALLI, Marco ZANNI

Proposal for a regulation
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 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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 648/201255. __________________ 5Regulation (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).__________________

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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 internal 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 mechanistic 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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 rating criteria should be precisely defined and harmonized. Examples of internal rating 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 31

(31) In order to develop a transparent and coherent internal rating system, the manager should document the procedures used for the internal 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 39

(39) It is important that the risk management of MMFs not be biased by short-term decisions influenced by the possible rating 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 a rating 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 rating. 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 42

(42) Constant Net Asset Value MMFs (CNAV MMFs) have the objective of preserving the capital of the investment while ensuring a high degree of liquidity. The majority of CNAV MMFs have a net asset value (NAV) per unit or share set, for example, at 1 €, $ or £ when they distribute the income to the investors. The others accumulate income in the NAV of the fund while maintaining the intrinsic value of the asset at a constant value.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 43

(43) To allow for the specificities of CNAV MMFs it is necessary that CNAV 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. 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 45

(45) In order to be able to absorb day-to- day fluctuations in the value of a CNAV MMF’s assets and allow it to offer a constant NAV per unit or share, the CNAV MMF should have at all times a NAV buffer amounting to at least 3% of its assets. The NAV buffer should serve as an absorbing mechanism for maintaining the constant NAV. All differences between the constant NAV per unit or share and the NAV per unit or share should be neutralized by using the NAV buffer. During stressed market situations, when the differences can rapidly increase, a procedure should ensure that the whole chain of management is involved. This escalation procedure should permit the senior management to take rapid remedy actions.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 46

(46) As a CNAV MMF that does not maintain the NAV buffer at the required level is not capable of sustaining a constant NAV per unit or share, it should be required to fluctuate the NAV and cease to be a CNAV MMF. Therefore, where despite the use of the escalation procedure the amount of the NAV buffer remains for one month below the required 3% by 10 basis points, the CNAV MMF should automatically convert into a MMF that is not allowed to use amortised cost accounting or rounding to the nearest percentage point. If before the end of the one month allowed for the replenishment a competent authority has justifiable reasons demonstrating the incapacity of the CNAV MMF to replenish the buffer, it should have the power to convert the CNAV MMF into a MMF other than a CNAV MMF. The NAV buffer is the only vehicle through which external support to a CNAV MMF can be provided.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Recital 47

(47) External support provided to a MMF ~~other than a CNAV MMF with the intention of ensur~~with a view to maintaining 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 marketsexternal support for MMFs should be prohibited.

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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.~~

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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, 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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 8 – paragraph 1 – point c

(c) financial derivative instruments other than OTC derivatives whose sole purpose is to hedge the duration and exchange risks inherent in other MMF investments;

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 9 – paragraph 1 – point d

~~(d) Where it takes exposure to a securitisation, it shall be subject to the additional requirements laid down in Article 10.~~deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 10

1. A securitisation shall be considered as eligible provided that all of the following conditions are met: (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (b) the underlying corporate debt is of high credit quality and liquid; (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. 2. For the purpose of a consistent application of paragraph 1, ESMA shall develop draft regulatory technical standards specifying: (a) the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt; (b) conditions and numerical thresholds determining when corporate debt is of high credit quality and liquid. ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by […]. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.Article 10 deleted Eligible securitisations

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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:

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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;deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 14 – paragraph 2

~~2. The aggregate of all exposures to securitisations shall not exceed 10% of the assets of a MMF.~~deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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.~~deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 14 – paragraph 5 – point c

~~(c) OTC financial derivative instruments giving counterparty risk exposure to that body.~~deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 14 – paragraph 6 – subparagraph 1

By way of derogation from paragraph 1(a), a competent authority may authorise a MMF to invest in accordance with the principle of risk-spreading up to 100% of its assets in different money market instruments issued or guaranteed by a central, regional or local authority or central bank of a Member State, the European Central Bank, the Union, the European stability mechanism or the European Investment Bank, a central authority or central bank of a third country, or by a public international body to which one or more Member States belong.deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – title

InExternal assessment procedure

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 1

1. ~~A manager of a~~ MMFs shall ~~establish, implement and consistently apply~~be subject to a prudent and rigorous inexternal assessment procedure for determining the credit quality of money market instruments, taking into account the issuer of the instrument and the characteristics of the instrument itself.

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 2

2. The ~~internal~~ assessment procedure shall be based on an inexternal rating system and on prudent, rigorous, systematic and continuous assignment methodologies~~. The assignment methodologies shall be subject to validation by the manager based on historical experience and empirical evidence, including back testing.~~ drawn up by independent specialist rating agencies. The MMF shall choose two rating agencies duly recognised by the competent European authority in accordance with Regulation (EU) No 462/2013 to assess issuers of money market instruments. That choice shall be notified to the ESMA. At least one of the two agencies chosen shall be European. This double-checking system will ensure more accurate assessment of the credit quality of market instruments.

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – introductory part

3. The ~~internal~~ assessment procedure shall comply with the following ~~requirement~~general principles:

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – point a

(a) a manager of a MMF shall ensure that the information used when assigning an internal credit rating is of sufficient quality, up-to-date and from reliable sources. That manager shall implement and maintain an effective process to obtain and update relevant information on issuer characteristics;

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – point b

(b) ~~a manager of a MMF shall adopt and implement adequate measures to ensure that the assignment of its internal ratings is based on~~ a thorough analysis of all the information that is available and pertinent, and includes all relevant driving factors that influence the creditworthiness of the issuer;

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – point c

(c) a ~~manager of a MMF shall monitor its assignments of internal ratings on an ongoing basis and review all assignments of internal rating at least annually. That manager shall~~ review of the assignment every time there is a material change that could have an impact on a~~n internal~~ credit rating. The manager shall establish ~~internal~~ arrangements to monitor the impact on its ~~internal~~ credit ratings of changes in macroeconomic, financial market or issuer specific conditions;

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – point d

(d) where a credit rating agency registered with the European Securities and Market Authority (ESMA) assigns a credit rating to an issuer of money market instruments, the downgrade below the two highest short term credit ratings used by that agency shall be considered to be material change for the purposes of point (c) and require the manager to undertake a new assignment procedure;deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 16 – paragraph 3 – point g

~~(g) assignments of internal ratings and their periodic reviews by the manager of a MMF shall not be performed by persons performing or responsible for the portfolio management of the MMF.~~deleted

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 17

1. Each issuer of a money market instrument in which a MMF intends to invest shall be assigned an internal rating pursuant to the internal assessment procedure. 2. The structure of the internal rating system shall comply with all of the following requirements: (a) the internal rating system shall be based on a single rating scale which exclusively reflects quantification of the credit risk of the issuer. The rating scale shall have six grades for non-defaulted issuers and one for defaulted issuers; (b) there shall be a clear relationship between issuer grades reflecting the credit risk of an issuer and the rating criteria used to distinguish that level of credit risk; (c) the internal rating system shall take into account the short-term nature of money market instruments. 3. The rating criteria referred to in paragraph 2(b) shall fulfil all of the following requirements: (a) comprise at least quantitative and qualitative indicators on the issuer of the instrument, and the macro-economic and financial market situation; (b) refer to the common numerical and qualitative reference values used to assess the quantitative and qualitative indicators; (c) be adequate for the particular type of issuer. At least the following types of issuers shall be distinguished: sovereign, regional or local public authority, financial corporations, and non-financial corporations. (d) In case of exposure to securitisations, take into account the credit risk of the issuer, the structure of the securitisation and the credit risk of the underlying assets.Article 17 deleted Internal rating system

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 18

1. A manager of a MMF shall document its internal assessment procedure and the internal rating system. Documentation shall include: (a) the design and operational details of its internal assessment procedures and internal rating systems in a manner that allows competent authorities to understand the assignment to specific grades and to evaluate the appropriateness of an assignment to a grade; (b) the rationale for and the analysis supporting the manager’s choice of the rating criteria and of its frequency of review. This analysis shall include the parameters, the model and the limits of the model used to choose the rating criteria; (c) all major changes in the internal assessment procedure, including identification of the triggers of changes; (d) the organisation of the internal assessment procedure, including the rating assignment process and the internal control structure; (e) complete internal rating histories on issuers and recognised guarantors; (f) the dates of assignment of internal ratings; (g) the key data and methodology used to derive the internal rating, including key rating assumptions; (h) the person or persons responsible for the internal rating assignment. 2. The internal assessment procedure shall be detailed in the fund rules or rules of incorporation of the MMF and all documents referred to in paragraph 1 shall be made available upon request by the competent authorities of the MMF and the competent authorities of the manager of the MMF.Article 18 deleted Documentation

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 19

The Commission shall be empowered to adopt delegated acts in accordance with Article 44 specifying the following points: (a) the conditions under which the assignment methodologies are deemed to be prudent, rigorous, systematic and continuous and the conditions of the validation, referred to in Article 16(2); (b) the definitions of each grade with respect to the quantification of the credit risk of an issuer referred to in Article 17(2)(a), and the criteria to determine the quantification of the credit risk referred to in Article 17(2)(b); (c) the precise reference values for each qualitative indicator and the numerical reference values for each quantitative indicator. These reference values of the indicators shall be specified for each rating grade taking into account the criteria in Article 17(3); (d) the meaning of material change as referred to in Article 16(3)(c).Article 19 deleted Delegated acts

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 20

1. The internal assessment procedures shall be approved by the senior management, the governing body, and, where it exists, the supervisory function of the manager of the MMF. These parties shall have a good understanding of the internal assessment procedures, the internal rating systems and the assignment methodologies of the manager and detailed comprehension of the associated reports. 2. Internal ratings-based analysisArticle 20 deleted Governance of the ~~MMF’s~~ credit risk profile shall be an essential part of the reporting to the parties referred to in paragraph 1. Reporting shall include at least the risk profile by grade, migration across grades, estimation of the relevant parameters per grade, and comparison of realised default rates. Reporting frequencies shall depend on the significance and type of information and shall be at least annual. 3. Senior management shall ensure, on an on-going basis that the internal assessment procedure is operating properly. Senior management shall be regularly informed about the performance of the internal assessment process, the areas where deficiencies were identified, and the status of efforts and actions taken to improve previously identified deficiencies.quality assessment

2015/01/12
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 23

~~The MMF or the manager of the MMF shall not solicit or finance a credit rating agency for rating the MMF.~~Article 23 deleted MMF credit ratings

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 25 – paragraph 2

2. In addition, in the case of CNAV MMFs, the stress tests shall estimate for different scenarios the difference between the constant NAV per unit or share and the NAV per unit or share, including the impact of the difference on the NAV buffer.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 26 – paragraph 1

1. The assets of a MMF shall be valued at least on a daily basis. The results of the assessments shall be published daily on the MMF website.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 27 – paragraph 4

4. The ‘constant NAV per unit or share’ shall be calculated as the difference between the sum of all assets of a CNAV MMF and the sum of all liabilities of a CNAV MMF valued in accordance with the amortised cost method, divided by the number of outstanding units or shares of the CNAV MMF.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 27 – paragraph 5

~~5. The constant NAV per unit or share of a CNAV MMF may be rounded to the nearest percentage point or its equivalent when the NAV is published in a currency unit.~~deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 27 – paragraph 6

~~6. The difference between the constant NAV per unit or share and NAV per unit or share of a CNAV MMF shall be continuously monitor~~deleted.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 28 – paragraph 2

~~2. By way of derogation from paragraph 1, the units or shares of a CNAV MMF shall be issued or redeemed at a price that is equal to the MMF’s constant NAV per unit or share.~~deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 29 – paragraph 1

1. AEach CNAV 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 w~~move to a floating NAV. The transition shall be supervised by the European Commission. The ESMA shall formulate technical provisions for the transition. Then t~~he NAV is published in a currency unit unless it has been explicitly authorised as a CNAV MMF~~ransition shall be completed within six months from the entry into force of this regulation.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 29 – paragraph 2

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.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 30

~~[...]~~deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 31

1. The NAV buffer shall only be used in case of subscriptions and redemptions to equalise the difference between the constant NAV per unit or share and the NAV per unit or share. 2. For the purposes of paragraph 1, in case of subscriptions: (a) where the constant NAV at which a unit or share is subscribed is higher than the NAV per unit or share, the positive difference shall be credited to the reserve account; (b) where the constant NAV at which a unit or share is subscribed is lower than the NAV, the negative difference shall be debited from the reserve account. 3. For the purposes of paragraph 1, in case of redemptions: (a) where the constant NAV at which a unit or share is redeemed is higher than the NAV per unit or share, the negative difference shall be debited from the reserve account; (b) where the constant NAV at which a unit or share is redeemed is lower than the NAV per unit or share, the positive difference shall be credited to the reserve account.Article 31 deleted Use of the NAV buffer

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 32

1. A CNAV MMF shall establish and implement an escalation procedure that ensures that the negative difference between the constant NAV per unit or share and the NAV per unit or share is considered by persons competent to act for the fund in a timely manner. 2. The escalation procedure shall require that: (a) where the negative difference reaches 10 basis points or its equivalent when the NAV is published in a currency unit, the senior management of the manager of the CNAV MMF be informed; (b) where the negative difference reaches 15 basis points or its equivalent when the NAV is published in a currency unit, the board of directors of the manager of the CNAV MMF, the competent authorities of the CNAV MMF and ESMA be informed; (c) the competent persons assess the cause of the negative difference and take appropriate action to reduce the negative effects.Article 32 deleted Escalation procedure

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 33

Replenishment of the NAV buffer 1. Whenever the amount of the NAV buffer falls below 3% it shall be replenished. 2. When the NAV buffer has not been replenished and for one month the amount of the NAV buffer stays below the 3% referred to in Article 30(1) by 10 basis points the MMF shall automatically cease to be a CNAV MMF and be prohibited from using the amortised cost or rounding methods. The CNAV MMF shall inform immediately each investor thereof in writing and in a clear and comprehensible way.Article 33 deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 34

~~1. 2. 3. 4~~Article 34 deleted Powers of the competent authority concerning the NAV buffer The competent authority of the CNAV MMF shall be immediately notified of any decrease below 3% in the amount of the NAV buffer. The competent authority of the CNAV MMF and ESMA shall be immediately notified when the amount of the NAV buffer decreases by 10 basis points below the 3% referred to in Article 30(1). Following the notification referred to in paragraph 1, the competent authority shall closely monitor the CNAV MMF. Following the notification in paragraph 2, the competent authority shall control that the NAV buffer has been replenished or the MMF has ceased to hold itself as a CNAV MMF and informed accordingly its investors.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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.~~deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 35 – paragraph 2

2. ~~MMFs other than CNAV~~ MMFs shall not be allowed to receive external support~~, except under the conditions laid down in Article 36~~.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 36

1. In exceptional circumstances justified by systemic implications or adverse market conditions the competent authority may allow a MMF other than a CNAV MMF to receive external support referred to in Article 35 that is intended for or in effect would result in guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share of the MMF provided that all of the following conditions are fulfilled: (a) the MMF duly justifies the necessity of external support and demonstrates through conclusive evidence the urgent need for external support; (b) the external support is limited in terms of the amount provided and the period of time when it is made available; (c) the competent authority is satisfied that the provider of the external support is financially sound and has sufficient financial resources to withstand without any adverse effects possible losses resulting from the external support granted. 2. For the purposes of paragraph 1(c), in case the provider of the external support is an entity subject to prudential supervision the agreement of the supervisory authority of that entity shall be sought in view of ensuring that the support to be granted by the entity is subject to adequate own funds provided by that entity and is in line with the risk management system of that entity. 3. Where the conditions referred to in paragraph 1 for receiving external support are fulfilled the MMF shall immediately inform each investor thereof in writing and in a clear and comprehensible way.Article 36 deleted Exceptional circumstances

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 37 – paragraph 1 – subparagraph 2

A CNAV MMF shall indicate clearly that it is a CNAV MMF in any external or internal document, report, statement, advertisement, letter or any other written evidence issued by it or its manager, addressed to or intended for distribution to prospective investors, unit-holders, shareholders or competent authorities of the MMF or its manager.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 37 – paragraph 2 – point b

(b) that the MMF does not rely on external support for guaranteeing the liquidity of the MMF ~~or stabilising the NAV per unit or share~~;

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 37 – paragraph 5

5. In addition to the information to be provided in accordance with paragraphs 1 to 4, a CNAV MMF shall explain clearly to investors and potential investors the use of the amortised cost method and/or of rounding. A CNAV MMF shall indicate the amount of its NAV buffer, the procedure to equalise the constant NAV per unit or share and the NAV per unit or share and shall state clearly the role of the buffer and the risks related to it. The CNAV MMF shall clearly indicate the modalities of replenishing the NAV buffer and the entity expected to fund the replenishment. It shall make available to investors all information concerning compliance with the conditions set out in Article 29(2)(a) to (g).deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 39 – paragraph 1 – subparagraph 1 a (new)

MMF authorisation shall be withdrawn if this regulation is infringed.

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 43 – paragraph 3

3. By way of derogation from the first sentence of Article 30(1), an existing UCITS or AIF that meets the criteria for the definition of a CNAV MMF set out in Article 2(10) shall establish a NAV buffer of at least: (a) 1% of the total value of the CNAV MMF’s assets, within one year from the entry into force of this Regulation; (b) 2% of the total value of the CNAV MMF’s assets, within two years from the entry into force of this Regulation; (c) 3% of the total value of the CNAV MMF’s assets, within three years from the date of entry into force of this Regulation.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
Article 43 – paragraph 4

4. For the purposes of paragraph 3 of this Article, the reference to 3% in Articles 33 and 34 shall be interpreted as referring to the amounts of the NAV buffer mentioned in points (a), (b) and (c) of paragraph 3 respectively.deleted

2015/01/09
Committee: ECON

Marco VALLI, Marco ZANNI

Proposal for a regulation
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:

2015/01/09
Committee: ECON