[ParlTrack]

Proposal for a regulation
Recital 3

(3) Events that occurred during the financial crisis have shed light on several features of MMFs that make them vulnerable when there are difficulties in financial markets ~~and therefore may spread or amplify risks through the financial system~~. When the prices of the assets in which the MMFs are invested in start to decrease, especially during stressed market situations, ~~the~~a MMF ~~cannot always maintain the promise to redeem~~that has not maintained sufficient levels of liquidity cannot always meet redemption requests immediately and to preserve the principal value of a unit or share issued by the MMF to investors. This situation may trigger massive and sudden redemption requests~~, potentially causing broader macroeconomic consequences~~.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 4

(4) Large redemption requests may force MMFs that have not maintained sufficient levels of liquidity to sell some of their investment assets in a declining market~~, fuelling a liquidity crisis. In these circumstances, m~~. Money market issuers can face severe funding difficulties if the market of commercial papers and other money market instruments dries up. ~~Any contagion to the short term funding market could then also represent direct and major difficulties for the financing of the financial institutions, corporations and governments, thus the economy.~~

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 5

(5) Asset managers, helped by sponsors, may decide to provide discretionary support to maintain the liquidity and the stability of their MMFs. ~~Sponsors are often forced~~Previously, sponsors have chosen to support their sponsored MMFs when losing value due to the reputational risk and fear that panic could spread into the sponsor other businesses. Depending on the size of the fund and the extent of redemption pressure, sponsor support may reach proportions that exceed their readily available reserves. Therefore, it is important to provide for a framework of uniform rules in order to prevent the failure of the sponsor ~~and risk contagion to other entities that sponsor MMFs~~, particularly a sponsor that is a large bank.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 23

(23) Asset Backed Commercial Papers (ABCPs), consisting of both commercial and consumer loans, 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 pools and the nature of the securitisation which must not be overly complex or highly tranched. 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~~the securitisation is of high credit quality, not unduly complex and liquid.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 26 a (new)

(26a) A MMF should be allowed to invest in shares of other MMFs. In order not to further systemic risk within the industry, a MMF should only be allowed to invest a maximum of 5% of its total assets in another MMF, and a maximum of 10% of its total assets in an aggregate of MMF shares.

2013/12/12
Committee: ECON

Sharon BOWLES

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.~~

2013/12/12
Committee: ECON

Sharon BOWLES

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~~assessment should be precisely defined and harmonized. Examples of internal ~~rating~~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 ~~rating~~assessments should reflect the fact that the creditworthiness of the issuer of the instruments is maintained at all times at the highest possible levels.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 31

(31) In order to develop a transparent and coherent internal ~~rating~~assessment 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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 35

(35) In order to strengthen MMFs' ability to face redemptions and prevent MMFs assets from being liquidated at heavily discounted prices, MMFs should hold ~~on an on-going basis~~ a minimum amount of liquid assets that mature daily or weekly. To calculate the proportion of daily and weekly maturing assets, the legal redemption date of the asset should be used. The possibility for the manager to terminate a contract on a short term basis can be taken into consideration. For instance, if a reverse repurchase agreement can be terminated with a one day prior notice, it should count as a daily maturing asset. If the manager has the possibility to withdraw money from a deposit account with a one day prior notice, it can count as a daily maturing asset. High quality sovereign debt securities that can be readily sold should count for the daily and weekly liquidity ratios.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 35 a (new)

(35a) If redemptions cause the daily and weekly liquidity ratios to fall below the required minimums, new investments should only be made in liquid assets maturing on a daily or weekly basis, as applicable.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 38 a (new)

(38a) Fees on redemptions combined with the temporary suspension of redemptions, or 'gating', stops runs and minimises contagion by allowing the MMF to reposition its investments, reopen, or to proceed with an orderly liquidation. If weekly maturing assets of a CNAV MMF fall below 50% of the required weekly liquidity ratio, both redemption fees and suspensions should be automatically triggered, unless the board of directors of the MMF, upon consultation with the competent authority, determines it to be in the best interest of the investors not to impose one or both of these conditions. At any time, it should remain at the discretion of the board of directors of the CNAV MMF, upon consultation of the competent authority, to impose a suspension of up to ten business days if it is determined to be necessary to assure fair treatment of investors.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 39

(39) ~~It is important that~~To avoid the risk management of MMFs ~~not be~~being 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, controls shall be put in place to ensure the fairness and transparency of any external credit rating of the MMF. Where a MMF seeks an external rating, this will be subject to and carried out in accordance with the requirements of the national competent authority of the credit rating agency. Should the MMF be awarded an unsolicited 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 which 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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 39 a (new)

(39a) 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.

2013/12/12
Committee: ECON

Wolf KLINZ, Sharon BOWLES, Olle SCHMIDT

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

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Recital 47

(47) External support provided to a MMF ~~other than a CNAV MMF~~ with the intention of ensuring 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 markets.

2013/12/12
Committee: ECON

Sharon BOWLES

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~~Investors shall also be informed of where they can access information on the portfolio of investment and the fund's levels of liquidity.

2013/12/12
Committee: ECON

Sharon BOWLES

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, dDuring 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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 5 – paragraph 1 – subparagraph 2

A UCITS or AIF shall use a designation that suggests a money market fund ~~or use terms such as ‘cash’, ‘liquid’, ‘money’, ‘ready assets’, ‘deposit-like’ or similar words~~ only where they have been authorised in accordance with this Regulation.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 5 – paragraph 2

2. The use of the designation ‘money market fund’, ‘MMF’ ~~or of a designation that suggests a MMF or the use of terms referred to in paragraph 1~~ shall comprise its use in any external or internal documents, reports, statements, advertisements, communications, letters or any other material addressed to or intended for distribution to prospective investors, unit- holders, shareholders or competent authorities in written, oral, electronic or any other form.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 8 – paragraph 1 – point d a (new)

(da) shares of other MMFs, provided that: (i) no more than 5% of the MMF's assets are invested in shares of an individual MMF, and (ii) no more than 10% of the MMF's assets are invested in aggregate in shares of MMFs.

2013/12/12
Committee: ECON

Sharon BOWLES

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

(c) the issuer of the money market instrument has ~~been awarded one of the two highest internal rating grades~~passed the internal credit assessment according to the rules laid down in Articles 16 to 19 of this Regulation.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 10 – paragraph 1 – point a

~~(a) the underlying exposure or pool of exposures consists exclusively of corporate debt;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 10 – paragraph 1 – point b

(b) the underlying ~~corporate debt~~securitisation is of high credit quality, not overly tranched, and liquid;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 10 – paragraph 1 – point c

(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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1 – point a

~~(a) the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 10 – paragraph 2 – subparagraph 1 – point b

(b) conditions and numerical thresholds determining when ~~corporate~~ debt is of high credit quality and liquid, and the limits for tranching.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 13 – paragraph 5 – subparagraph 1 – point b

(b) they are issued or guaranteed by a central authority or central bank of a third country, provided that the third country issuer of the asset ~~is awarded one of the two highest internal rating grades~~passes the internal credit assessment according to the rules laid down in Articles 16 to 19.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 13 – paragraph 6 – subparagraph 1

~~The Commission~~ESMA shall be empowered to adevelopt d~~elegated acts in accordance with Article 44~~raft regulatory technical standards specifying quantitative and qualitative liquidity requirements applicable to assets referred to in paragraph 5 and quantitative and qualitative credit quality requirements applicable to assets referred to in paragraph 5(a).

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 13 – paragraph 6 – subparagraph 2

For this purpose ~~the Commission~~ESMA shall take into account the report referred to in Article [509(3)] of Regulation (EU) No 575/2013.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 13 – paragraph 6 – subparagraph 3

~~The Commission shall adopt the delegated act referred to in the first subparagraph no later than 31 December 2014~~ESMA shall submit those draft regulatory standards to the Commission no later than 31 December 2014. Power is conferred on 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 of the European Parliament and of the Council.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 14 – paragraph 4

4. The aggregate amount of cash provided to the same counterparty of a MMF in reverse repurchase agreements shall not exceed 210% of its assets.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 16 – paragraph 2

2. The internal assessment procedure shall be based on ~~an internal 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.

2013/12/12
Committee: ECON

Sharon BOWLES

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;

2013/12/12
Committee: ECON

Sharon BOWLES

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~~internal assessment procedure is based on a thorough analysis of all the information that is reasonably available and pertinent, and includes all relevant driving factors that influence the creditworthiness of the issuer;

2013/12/12
Committee: ECON

Sharon BOWLES

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

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

2013/12/12
Committee: ECON

Sharon BOWLES

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 ass~~ign~~essment procedure;

2013/12/12
Committee: ECON

Sharon BOWLES

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

(f) when methodologies, models or key rating assumptions used in the internal assessment procedures are changed, the manager of a MMF shall review all affected internal ~~credit rating~~assessments as soon as possible and no later than one month after the change;

2013/12/12
Committee: ECON

Sharon BOWLES

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

(g) assignments of internal ~~rating~~assessments 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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 17

Article 17 Internal rating system 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.deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – introductory part

1. A manager of a MMF shall document its internal assessment procedure ~~and the internal rating system~~. Documentation shall include:

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point a

(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~~credit assessment process;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point b

(b) the rationale for and the analysis supporting the manager's choice of the ~~rating~~assessment 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~~determine the credit assessment;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point d

(d) the organisation of the internal assessment procedure, including the ~~rating assignment process and the~~ internal control structure;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point e

(e) complete internal ~~rating~~assessment histories on issuers and recognised guarantors;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point f

(f) the dates of ~~assignment of internal rating~~the credit assessments;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point g

(g) the key data and methodology used to derive the ~~internal rating, including key rating assumptions~~credit assessment;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 18 – paragraph 1 – point h

(h) the person or persons responsible for the ~~internal rating assign~~credit assessment.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 19 – title

~~Delegated act~~Regulatory Technical Standards

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 19 – paragraph 1 – introductory part

~~The Commission~~ESMA shall be empowered to adevelopt d~~elegated acts in accordance with Article 44~~raft regulatory technical standards specifying the following points:

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 19 – paragraph 1 – point b

(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);deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 19 – paragraph 1 – point c

(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);deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 19 – paragraph 1 a (new)

ESMA shall submit those draft regulatory technical standards to the Commission no later than 31 December 2014. Power is conferred on the Commission to adopt the regulatory technical standards referred to in this Article in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 20 – paragraph 1 – subparagraph 2

These parties shall have a good understanding of the internal assessment procedures, ~~the internal rating systems~~ and the ass~~ign~~essment methodologies of the manager and detailed comprehension of the associated reports.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 20 – paragraph 2

2. Internal ~~ratings-based~~credit assessment analysis 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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 21 – paragraph 1 – point c

(c) at least 10% of its assets shall be comprised of daily maturing assets. A short-term MMF shall not acquire any asset other than a daily maturing asset when such acquisition would result in the short-term MMF investing less than 10% of its portfolio in daily maturing assets;deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 21 – paragraph 1 – point d

(d) at least 20% of its assets shall be comprised of 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.deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 21 – paragraph 1 a (new)

1a. A short-term MMF shall ensure: (a) at least 10% of its assets are comprised of daily maturing assets. A short-term MMF shall not acquire any asset other than a daily maturing asset when such acquisition would result in the short-term MMF investing less than 10% of its portfolio in daily maturing assets; and (b) at least 30% of its assets are comprised of 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 30% of its portfolio in weekly maturing assets.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 22 – paragraph 1 – point d

(d) at least 230% of its assets shall be comprised of 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 230% of its portfolio in weekly maturing assets..

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 22 – paragraph 3 – introductory part

3. Notwithstanding the individual limit laid down in paragraph 2, a standard MMF may combine, where this would lead to investment of up to 150% of its assets in a single body, any of the following:

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 23 – paragraph 1

~~The~~If a MMF or the manager of ~~the~~a MMF s~~hall not solic~~eeks an external credit rating, it will be subject to and carried out in accordance with the requirements of the national competent authority o~~r finance a credit rating agency for rating the MMF~~f the credit rating agency. Should the MMF be awarded an unsolicited external rating, either on the own initiative of the credit rating agency or following a request by a third party that is independent of the MMF or the manager and which does not act on behalf of any of them, the MMF manager shall refrain from relying on criteria that would be attached to that external rating.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 24 – paragraph 1 – point b

(b) the ~~sophistica~~industry definition of the ~~different~~ investors;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 24 – paragraph 1 – point c

~~(c) the risk aversion of the different investors;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – introductory part

The stress tests shall be based on objective criteria and consider the effects of severe plausible scenarios. ~~The stress test scenarios shall at least take into consideration reference parameters , including the following factors:~~

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – point a

~~(a) hypothetical changes in the level of liquidity of the assets held in the portfolio of the MMF;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – point b

~~(b) hypothetical changes in the level of credit risk of the assets held in the portfolio of the MMF, including credit events and rating events;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – point c

~~(c) hypothetical movements of the interest rates;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – point d

~~(d) hypothetical levels of redemption.~~deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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~~.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 26 – paragraph 3 – subparagraph 2 – introductory part

When marking to market only quality market data from recognised and independent sources shall be used. The quality of the market data shall be assessed on the basis of all of the following factors:

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 26 – paragraph 4 – subparagraph 3

When marking to model, ~~no valuation models based on amortised cost~~only quality market data from recognised and independent sources shall be used.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 – point a

~~(a) it has established a NAV buffer in accordance with the requirements in Article 30;~~deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 – point b

~~(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;~~deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 – point c

~~(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;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 – point f

(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;

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 – point g

~~(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

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 29 – paragraph 2 a (new)

2a. If the weekly maturing assets of a CNAV MMF fall below 15% of the fund's total assets at the end of any business day, the MMF shall impose a redemption fee to investors redeeming their shares of up to 2%. Any fee imposed would be lifted automatically once the MMF's level of weekly liquidity returns to 30% of its total assets, or after 20 business days. The fee could be lifted at any time if the board of directors of the MMF, upon consultation with the competent authority, determine it to be in the best interest of the fund. 4. If the weekly maturing assets of a CNAV MMF fall below 15% of the fund's total assets at the end of any business day, the MMF shall impose a suspension of redemption for up to ten business days. Any suspension imposed would be lifted automatically once the MMF's level of weekly liquidity returns to 30% of its total assets, or after ten business days. The suspension could be lifted at any time if the board of directors of the MMF, upon consultation with the competent authority, determine it to be in the best interest of the fund. Notwithstanding the threshold specified above, a CNAV MMF may, at the discretion of the board of directors of the MMF, temporarily suspend share redemptions for up to ten business days at any time if determined to be necessary to assure fair treatment of investors. 5. ESMA will provide guidance on the common procedures for provisions within paragraphs 3 and 4 of this Article.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 30

~~[...]~~deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 31

Article 31 Use of the NAV buffer 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.deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 32 – paragraph 2 – point c

~~(c) the competent persons assess the cause of the negative difference and take appropriate action to reduce the negative effects.~~deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 33

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.deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 34

Article 34 Powers of the competent authority concerning the NAV buffer 1. The competent authority of the CNAV MMF shall be immediately notified of any decrease below 3% in the amount of the NAV buffer. 2. 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). 3. Following the notification referred to in paragraph 1, the competent authority shall closely monitor the CNAV MMF. 4. 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.deleted

2013/12/12
Committee: ECON

Sharon BOWLES

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

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 36 – paragraph 1 – introductory part

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:

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 36 – paragraph 3

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.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 37 – paragraph 1 a (new)

1a. A MMF will provide to investors on its website, and update at least monthly, the portfolio of investment of the MMF. A MMF will provide to investors on its website, and update at least weekly, the liquidity levels of the fund, the WAM, the WAL, and the aggregated percentage of the top 5 clients of the MMF.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 37 – paragraph 2 – point c a (new)

(ca) that investors can obtain information on the portfolio of investment and the liquidity levels of the fund on the fund's website.

2013/12/12
Committee: ECON

Sharon BOWLES

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)redemption fees and gates, and the amortised cost method.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 38 – paragraph 1

1. For each MMF managed, the manager of the MMF shall report information to the competent authority of the MMF, ~~at least on a quarter~~on a weekly basis. The manager shall ~~upon request~~ provide the information also to the competent authority of the manager if different from the competent authority of the MMF.

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 38 – paragraph 2 – subparagraph 1 – point c

~~(c) the size and the evolution of the NAV buffer;~~deleted

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 38 – paragraph 3 – subparagraph 1

ESMA shall develop draft implementing technical standards to establish a reporting template to regulators that shall contain all the information listed in paragraph 2. ESMA shall develop draft implementing technical standards to establish a disclosure template to investors that contains information listed in paragraph 2. (a), (b), and (d) of this Article.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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 Regulationdeleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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

2013/12/12
Committee: ECON

Sharon BOWLES

Proposal for a regulation
Article 44

Article 44 Exercise of the delegation 1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article. 2. The power to adopt delegated acts referred to in Articles 13 and 19 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Regulation. 3. The delegation of power referred to in Articles 13 and 19 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 4. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. 5. The delegated acts adopted pursuant to Articles 13 and 19 shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.deleted

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Sharon BOWLES

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:

2013/12/12
Committee: ECON

96 Amendments of Sharon BOWLES related to 2013/0306(COD)

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