[ParlTrack]

Proposal for a regulation
Recital 6 a (new)

(6a) Measures need to be implemented to reduce the risk of runs and to address the first mover advantage. As recommended by IOSCO, appropriate safeguards shall reinforce MMFs' resilience and ability to face significant redemptions. These measures shall be: 1) Imposing minimum levels of daily, weekly and monthly liquid assets that MMFs must hold. MMF should also adjust their holdings depending on market conditions and their investor basis. 2) Enhancing the quality of the assets a MMF holds. 3) Requiring money market funds to institute a liquidity fee in cases of high stress in financial markets in which the MMF is facing an unusually high volume of redemptions. 4) Permitting MMFs to impose a gating mechanism in certain circumstances which would allow the fund to temporarily suspend redemptions.

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

Olle SCHMIDT

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

(d) reverse repurchase agreements or repurchase agreements provided that the cash received is not reinvested and the exposure to repurchase agreements does not exceed 10% of the assets of a MMF;

2013/12/12
Committee: ECON

Olle SCHMIDT

Proposal for a regulation
Article 17 – paragraph 2 – point a

(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;~~

2013/12/12
Committee: ECON

Olle SCHMIDT

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; A daily maturing asset shall include sovereign debt traded on transparent markets with an ongoing turnover.

2013/12/12
Committee: ECON

Olle SCHMIDT

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. A weekly maturing asset shall include liquid sovereign debt on transparent markets with an ongoing turnover.

2013/12/12
Committee: ECON

Olle SCHMIDT

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

In cases where the level of assets falls below either of the above thresholds, the MMF shall impose liquidity penalties on redeeming investors which are appropriate to disincentive withdrawals and balance the interests of all investors. [Penalty level and calibration of requirements to be set by ESMA]

2013/12/12
Committee: ECON

Olle SCHMIDT

Proposal for a regulation
Article 23

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

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

Wolf KLINZ, Olle SCHMIDT

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~~the use o~~r replenishment of the NAV buffer and the conversion of the CNAV MMF~~f a temporary suspension of redemptions;

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Burkhard BALZ

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

2a. in case of the money market fund's weekly liquid assets falling below 15% of its total assets, the fund must impose a liquidity fee on all redemptions, unless the board of directors of the fund, including a majority of its independent directors, after having consulted the competent authority, concludes that imposing such a fee would not be in the best interest of the fund.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT, Burkhard BALZ

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

2b. in case of the money market fund's weekly liquid assets falling below 15% of its total assets, the money market fund board, after having consulted the competent authority, is entitled to impose a temporary suspension of redemptions for a limited period of time, of up to 30 days, unless the board of directors of the fund, including a majority of its independent directors, after having consulted the competent authority, concludes that imposing such a temporary suspension would not be in the best interest of the fund.

2013/12/12
Committee: ECON

Wolf KLINZ, Olle SCHMIDT

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

2c. ESMA shall develop the criteria for the additional safeguard mechanisms, in particular how the liquidty fee should be calculated as well as how the temporary suspension of redemptions should be designed.

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

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

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

Olle SCHMIDT

Proposal for a regulation
Article 43 – paragraph 1

1. Within the ~~six~~eighteen months following the date of entry into force of this Regulation, an existing UCITS or AIF that invests in short term assets and has as distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment shall submit an application to its competent authority together with all documents and evidence necessary to demonstrate the compliance with this Regulation.

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

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

27 Amendments of Olle SCHMIDT related to 2013/0306(COD)

ParlTrack - 2011-2024