BETA

Activities of Frank ENGEL related to 2013/0306(COD)

Plenary speeches (1)

2016/11/22
Dossiers: 2013/0306(COD)

Amendments (28)

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

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

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 supportThird parties providing external support to a MMF other than a CNAV MMF 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.

2015/01/12
Committee: ECON

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

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.

2015/01/12
Committee: ECON

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

(da) High-quality securitisation instruments;

2015/01/12
Committee: ECON

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

(db) Existing high-quality MMFs;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 1 – introductory part

1. A MMF shall invest no more than 510% of its assets in any of the following:

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 5 – introductory part

5. Notwithstanding the individual limits laid down in paragraphs 1 and 3, a MMF shall not combine, where this would lead to investment of more than 105% of its assets in a single body, any of the following:

2015/01/12
Committee: ECON

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~~.

2015/01/09
Committee: ECON

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 (in accordance with existing rules on UCITS), divided by the number of outstanding units or shares of the CNAV MMF.

2015/01/09
Committee: ECON

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

2015/01/09
Committee: ECON

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

(aa) its rules or instruments of incorporation, in addition to its offer documents, clearly provide for liquidity fees and/or repurchase portals. The board of directors of the MMF, or, as the case may be, its management company, may decide to implement liquidity fees or a redemption portal each time a trigger is activated. These mechanisms must be adapted to ensure that investors in the CNAV MMF do not suffer as a result of the redemption of other investors. The competent national authorities shall be informed immediately in the event of such mechanisms being activated. If redemption is suspended for a maximum period of 30 days, the CNAV MMF shall be converted into a VNAV MMF or be liquidated. ESMA shall determine the nature of the trigger allowing for the possible implementation of liquidity fees or redemption portals.

2015/01/09
Committee: ECON

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

2015/01/09
Committee: ECON

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

2015/01/09
Committee: ECON

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~~regarding the implementation of liquidity fees, redemption portals and their conversion ~~of the CNAV MMF;~~.

2015/01/09
Committee: ECON

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

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30

~~[...]~~deleted

2015/01/09
Committee: ECON

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

Proposal for a regulation
Article 33

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 Replenishment of the NAV buffer

2015/01/09
Committee: ECON

Proposal for a regulation
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.Article 34 deleted

2015/01/09
Committee: ECON

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~~without the approval of the competent national authority of the CNAV MMF and, when appropriate, the existing sponsor.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 37 – paragraph 4 – subparagraph 1 a (new)

Furthermore, the CNAV MMF shall make the following information available to its investors: (a) the total value of assets; (b) the weighted average maturity (WAM) and the weighted average life (WAL); (c) the maturity breakdown; (d) the proportion of assets in the portfolio reaching maturity in one day; (e) the proportion of assets in the portfolio reaching maturity in one week; (f) the net yield; (g) the daily indicative value at the market rate to four decimal places; (h) information on the assets held in the MMF’s portfolio, such as the name, country, maturity and asset type (including details on the counterparty in the case of resale agreements).

2015/01/09
Committee: ECON

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)~~.

2015/01/09
Committee: ECON

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

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

2015/01/09
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 1

1. Within the ~~six~~24 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.

2015/01/09
Committee: ECON

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

2015/01/09
Committee: ECON

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