BETA

119 Amendments of Eva JOLY related to 2013/0306(COD)

Proposal for a regulation
Recital 17

(17) It is important that UCITS and AIFs that have the characteristics of MMFs be identified as MMFs and that their capacity to comply on an on-going basis with the new uniform rules on MMFs be explicitly verified. For this purpose competent authorities should authorise MMFs. For UCITS the authorisation as MMF should be part of the authorisation as UCITS in accordance with the harmonised procedures envisaged in Directive 2009/65/EC. For AIFs, as they are not subject to harmonised authorisation and supervision procedures under Directive 2011/61/EU, it is necessary to provide for common basic rules on authorisation that mirror the existing UCITS harmonised rules. Such procedures should ensure that an AIF authorised as a MMF has ~~as manager~~ an alternative investment fund manager (AIFM) authorised in accordance with Directive 2011/61/EU.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 22

(22) Money market instruments are transferable instruments normally dealt in on the money market, such as treasury and local authority bills, certificates of deposits, commercial papers, bankers' acceptances or medium- or short-term notes. They should be eligible for investment by MMFs only insofar as they comply with maturity limits and are considered by the MMF to be of high credit quality.

2015/01/12
Committee: ECON

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 as well as to ensure that the pool of exposures is sufficiently diversified 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 and liquid debt instruments that have been issued by corporates in the course of their business activity, such as trade receivables. Instruments such as auto loans and leases, equipment leases, consumer loans, residential mortgage loans, credit card receivables or any other type of instrument linked to the acquisition or financing of services or goods by consumers should not be eligible. ESMA in close cooperation with EBA should be entrusted with drafting regulatory technical standards to be submitted for endorsement by the Commission with regard to the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt and the conditions, whether it is sufficiently diversified as well as the and numerical thresholds determining when corporate debt is of high credit quality and liquid.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 25

(25) Financial derivative instruments eligible for investment by a MMF should only serve the purpose of hedging interest rate and currency risk and should only have as an underlying instrument interest rates, exchange currencies or indices representing these categories. Any use of derivatives for another purpose or on other underlying assets should be prohibited. Derivatives should only be used as a complement to the fund strategy but not as the main tool for achieving the fund's objectives. Should a MMF invest in assets labelled in another currency than the currency of the fund, it is expected that the MMF manager would hedge the entire currency risk exposure, including via derivatives. MMFs should be allowed to invest in financial derivative instruments if those instruments are submitted to the clearing obligation as defined in Regulation (EU) No 648/2012. 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 derivative instruments are considered to serve the purpose of hedging the duration and exchange risks inherent to other investments of the MMF.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 26

(26) Reverse repurchase agreements could be used by MMFs as a means to invest excess cash on a very short-term basis, provided that the position is fully collateralized. In order to protect the interests of the investors it is necessary to ensure that the collateral provided in the framework of reverse repurchase agreements be of high quality. All other efficient portfolio management techniques, including securities lending and borrowing, should not be used by the MMF as they are likely to impinge on achieving the investment objectives of the MMF. ESMA in close cooperation with EBA should be entrusted with drafting regulatory technical standards to be submitted for endorsement by the Commission with regard to the quantitative and qualitative requirements applicable to the collateral provided in the framework of reverse repurchase agreements.

2015/01/12
Committee: ECON

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 210% of the MMF's assets. All ~~over-the-~~derivatives count~~er (OTC) derivative~~racts should be subject to Regulation (EU) No 648/20125. __________________ 5 Regulation (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

Proposal for a regulation
Recital 28

(28) For prudential reasons and for avoiding the exercise of significant influence over the management of an issuing body by the MMF, it is necessary to avoid excessive concentration by a MMF in investments issued by the same issuing body. For the purpose of this Regulation a body shall consist of an entity or group of connected entities that meets the definition of a group of connected clients in Regulation (EU) No 575/2013.

2015/01/12
Committee: ECON

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 notified to the competent authority, ESMA and communicated upon request to the interested stakeholders.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 38 a (new)

(38a) In exceptional circumstances justified by systemic implications or adverse market conditions, ESMA should have the power to impose the temporary suspension of redemption of units or shares of a MMF.

2015/01/12
Committee: ECON

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 the manager of the MMF should also not rely on external rating for establishing or updating its internal assessment procedure. 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.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 40

(40) As part of a prudent risk management, MMFs should periodically ~~conduct stress testing~~and at least on a yearly basis conduct stress testing and develop plans for different possible scenarios including a recovery plan. The managers of MMFs are expected to act in order to strengthen the MMF's robustness whenever the results of stress testing point to vulnerabilities.

2015/01/12
Committee: ECON

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. Amortised cost accounting should be applied only where it is deemed to allow for an appropriate approximation of the price of the instrument. The use of amortisation should be restricted to instruments with low residual maturity that do not present significant vulnerability to market risks such as credit or interest rate risks. A residual maturity of 60 days should be considered as the maximum. Materiality thresholds of 10 basis points and escalation procedures should be in place to ensure that corrective actions are promptly taken when the amortised cost no longer provides a reliable approximation of the price of the instruments. 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, as well as its disclosure on the MMF website on a daily basis, a CNAV MMF should also calculate the value of its assets on the basis of the marking to market or marking to model methods.

2015/01/12
Committee: ECON

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 negative 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. Each CNAV MMF should also establish an additional countercyclical buffer to be filled whenever there are positive differences between the constant NAV per unit or share and the NAV per unit or share. Five years after the entry into force of this Regulation, all CNAV MMF established, managed or marketed in the Union shall be converted into VNAV or a variable share constant CNAV MMF unless such a CNAV MMF applies for and obtains authorisation as a credit institution in accordance with Article 8 of Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and complies with the prudential requirements established in that Directive and in Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms.

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 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. In order to avoid putting at risk taxpayers' money, Member States should ensure that external support is not given by any sovereign, regional or local public authority. Against this background, ESMA should elaborate detailed guidelines by 31 July 2015 on the maximum amount that sponsors may grant, the applicable conditions, the characteristics of the financial sponsorship provided in accordance with this Regulation and the maximum duration of the sponsorship.

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 buffers mechanism they are applying to maintain the constant NAV per unit or share.

2015/01/12
Committee: ECON

Proposal for a regulation
Recital 49

(49) To ensure that competent authorities are able to detect, monitor and respond to risks in the MMF market, MMFs should report to their competent authorities a detailed list of information, in addition to reporting already required under Directives 2009/65/EC or 2011/61/EU. Competent authorities should collect these data in a consistent way throughout the Union in order to obtain a substantive knowledge of the main evolutions of the MMF market. To facilitate a collective analysis of potential impacts of the MMF market in the Union, such data should be transmitted to the European Securities and Markets Authority (ESMA) who should create a central database for MMFs and publish annually a report identifying the main developments of MMFs in the Union.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 2

~~2. Member States shall not add any additional requirements in the field covered by this Regulation.~~deleted

2015/01/12
Committee: ECON

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

(2) ‘'money market instruments’' means ~~money market~~transferable instruments ~~as defined~~referred to in Article 2(1)(o) of Directive 2009/65/EC normally dealt in on the money market, such as treasury and local authority bills, certificates of deposits, commercial papers, bankers' acceptances or medium- or short-term notes;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 4

(4) ‘repurchase agreement’ means any agreement in which one party ~~transfers~~ purchases securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 12

(12) ‘"constant Net Assets Value Money Market Fund’" (CNAV MMF) means a money market fund that maintains an unchanging value NAV per unit or share; where income in the fund is accrued daily or can either be paid out to the investor, and where assets are generally valued according to the amortised cost method or the NAV is rounded to the nearest percentage point or its equivalent in currency term; "a variable share constant CNAV MMF means an MMF which in order to maintain a stable net asset value per share, cancels an appropriate number of shares when asset values decline or net investment income is negative",

2015/01/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 17 a (new)

(17a) "MMF Host Member State" means the Member States where a significant proportion of MMF units or shares are marketed;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 a (new)

ESMA shall develop draft regulatory technical standards specifying the definitions of paragraph 1. ESMA shall submit those draft regulatory technical standards to the Commission by 31 December 2015. 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.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – subparagraph 1 a (new)

An MMF or an MMF manager may be established in a third country or jurisdiction provided that that third country or jurisdiction is not a country or jurisdiction: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, or - which acts as an offshore financial centre.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 a (new)

1 a. An MMF or an MMF manager may be established in a third country or jurisdiction provided that that third country or jurisdiction is not a country or jurisdiction: - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, or - which acts as an offshore financial centre. - which does not provide for tax measures which entail no or nominal taxes or where advantages are granted even without any real economic activity and substantial economic presence within the third country offering such tax advantages; - which has appropriate cooperation arrangements with the competent authorities of the home Member State of the MMF manager which entails that an efficient exchange of information can be ensured allowing competent authorities to carry out their duties in accordance with this Regulation; - which is not listed as a Non-Cooperative Country and Territory by FATF; - which has signed an agreement with the home Member State of the MMF manager and with each other Member State in which the units or shares of the MMF are intended to be marketed, so that it is ensured that the third country fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 2

2. A collective investment undertaking that requires authorisation as a UCITS under Directive 2009/65/EC shall be authorised as a MMF as part of the authorisation procedure pursuant to Directive 2009/65/EC provided that it performs MMF activities pursuant to this Regulation within 12 months after its authorisation.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 5 – point f

(f) any other information or document requested by the competent authority of the home or host MMF to verify compliance with the requirements of this Regulation.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 7 a (new)

7 a. In order to ensure uniform conditions of application of this Article, ESMA shall develop draft implementing technical standards defining the format of information to be provided in accordance with paragraphs 5, 6 and 7. ESMA shall submit those draft implementing technical standards to the Commission by 31 December 2015. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 4 – paragraph 1

1. An AIF shall be authorised as a MMF only if its competent authority has approved the application of an AIFM authorised under Directive 2011/61/EU to manage the AIF, the fund rules and the choice of the depositary provided that it performs MMF activities pursuant to this Regulation within 12 months after its authorisation.

2015/01/12
Committee: ECON

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

1 a. An AIF MMF or an AIFM of a MMF may be established in a third country or jurisdiction provided that the third country or jurisdiction is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 4 – paragraph 2 a (new)

2 a. In order to ensure uniform conditions of application of paragraph 2, ESMA shall develop draft implementing technical standards defining the format of information to be provided in accordance with paragraphs 2. ESMA shall submit those draft implementing technical standards to the Commission by 31 December 2015. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 5

5. This Regulation shall not prevent MMFs from applying investment limits that are stricter than those required by this Regulation. In such case the MMF shall inform the competent authority of the stricter investment limits applied.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 2 – point c

(c) taking direct or indirect exposure to equity, bonds, ETFs or commodities, including via derivatives, certificates representing them, indices based on them or any other mean or instrument that would give an exposure to them;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 2 – point e

~~(e) borrowing and lending cash.~~deleted

2015/01/12
Committee: ECON

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

(b) the underlying corporate debt is of high credit quality and liquid and the pool of exposure is sufficiently diversified according to the principle of risk spreading and as demonstrated by a low average default correlation;

2015/01/12
Committee: ECON

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 and whether it is considered to be sufficiently diversified;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 11 – paragraph 1 – point b

(b) the deposit matures in no more than 12 months or 24 months for standard MMF;

2015/01/12
Committee: ECON

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:~~is subject to the clearing obligation referred to in Regulation (EU) No 648/2012.

2015/01/12
Committee: ECON

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;

2015/01/12
Committee: ECON

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.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 1 a (new)

For the purpose of a consistent application of this Article, ESMA shall develop draft regulatory technical standards specifying the conditions and circumstances under which the derivative instrument serves the purpose of hedging the duration and exchange risks inherent to other investments of the MMF 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.

2015/01/12
Committee: ECON

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

~~The Commission shall be empowered to adopt delegated acts~~ ESMA in close cooperation with EBA shall develop draft regulatory technical standards specifying a~~ccordance with Article 44 specifying~~ppropriate margining requirements for the purpose of paragraph 1(b), 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).

2015/01/12
Committee: ECON

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

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

2015/01/12
Committee: ECON

Proposal for a regulation
Article 13 – paragraph 6 – subparagraph 2 a (new)

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.

2015/01/12
Committee: ECON

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

1. A MMF shall invest no more than 54% of its assets in any of the following:

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 1 a (new)

1a. For the purpose of this Regulation a body shall consist of an entity or group of connected entities that meets the definition of a group of connected clients in Regulation (EU) No 575/2013;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 2

2. The aggregate of all exposures to securitisations shall not exceed 105% of the assets of a MMF.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 2 a (new)

2a. A MMF shall invest no more than 20% of its asset in eligible assets issued in a third country currency.

2015/01/12
Committee: ECON

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 52% of its assets.

2015/01/12
Committee: ECON

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 2015% of its assets.

2015/01/12
Committee: ECON

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

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

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 6 – subparagraph 2 – point a

(a) the MMF holds money market instruments from at least ~~six~~ten different issues by the respective issuer;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 6 – subparagraph 2 – point b

(b) the MMF limits the investment in money market instruments from the same issue to maximum 320% of its assets;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 15 – paragraph 1

1. A MMF may not hold more than 105% of the money market instruments issued by a single body.

2015/01/12
Committee: ECON

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 ~~annual~~quarterly. That manager shall review the assignment every time there is a material change that could have an impact on an 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

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

(e) assignment methodologies shall be reviewed at least annually to determine whether they remain appropriate for the current portfolio and external conditions and shall be transmitted to competent authorities. The competent authority shall send the assignment methodologies to ESMA;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 17 – paragraph 1

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 established in conformity with the MMF internal rating system.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 17 – paragraph 3 – point a

(a) comprise at least quantitative and qualitative indicators on the issuer of the instrument, including idiosyncratic characteristics of the issuer and the macro-economic and financial market situation;

2015/01/12
Committee: ECON

Proposal for a regulation
Article 17 – paragraph 3 – point c a (new)

(ca) the rating system shall apply more than one methodology and include a mechanism for combing their results.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 17 – paragraph 3 – point c b (new)

(cb) identify the sensitivity of the resulting rating values to a range of plausible changes in input values. The assumptions shall be reported with each rating and regularly reviewed.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 18 – paragraph 2

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. The internal rating system shall be transmitted to the competent authority. The competent authority shall send the internal rating system to ESMA.

2015/01/12
Committee: ECON

Proposal for a regulation
Article 22 – paragraph 2

2. ABy way of derogation from Article 14 a standard MMF may invest up to 10% of its assets in money market instruments issued by a single body.

2015/01/12
Committee: ECON

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

3. Notwithstanding the individual limit laid down in paragraph 2, and by way of derogation from Article 14 a standard MMF may combine, where this would lead to investment of up to 15% of its assets in a single body, any of the following:

2015/01/12
Committee: ECON

Proposal for a regulation
Article 22 – paragraph 3 – point c

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

2015/01/12
Committee: ECON

Proposal for a regulation
Article 23 – paragraph 1

The MMF or the manager of the MMF shall not solicit or finance a credit rating agency for rating the MMF. and shall not rely on any external rating for establishing or updating its internal assessment procedure referred to in article 16.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 24 a (new)

Article 24 a Temporary suspension of redemption 1. In exceptional circumstances justified by systemic implications or adverse market conditions the competent authority may require the temporary suspension of redemption of units or shares of a MMF; 2. For the purpose of a consistent application of paragraph 1, ESMA shall develop draft regulatory technical standards specifying the conditions and circumstances under which the temporary suspension of redemption may be required; 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.

2015/01/09
Committee: ECON

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

For each MMF there shall be in place sound stress testing processes that allow identifying possible events or future changes in economic conditions that could have unfavourable effects on the MMF. The manager of a MMF shall regularly and at least on a yearly basis conduct stress testing and develop action plans for different possible scenarios including a recovery plan. The action plans shall be approved by the competent authorities.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 1 a (new)

The Board of Directors of the manager of the MMF is authorized to establish additional scenarios or reference parameters on which the tests should be based and to tailor the tests, as appropriate, for different market conditions and potential risks that the MMF may face;

2015/01/09
Committee: ECON

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

(c) hypothetical ~~movements of the~~increases in short-term interest rates;

2015/01/09
Committee: ECON

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

(d) hypothetical ~~levels of~~increases in shareholders redemption.s

2015/01/09
Committee: ECON

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

(da) hypothetical widening or narrowing of spreads among indexes to which interest rates of portfolio securities are tied

2015/01/09
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 2 – point d b (new)

(db) hypothetical macro systemic shocks affecting the economy as a whole.

2015/01/09
Committee: ECON

Eva JOLY, Eva JOLY

Proposal for a regulation
Article 25 – paragraph 7

7. ESMA shall ~~issue guidelines with a view to establishing~~develop draft regulatory technical standards after consultation with the ESRB specifying economic scenarios, including baseline, adverse, and severely adverse scenarios, that are to be used in MMF stress testing and other common reference parameters of the stress test scenarios to be included in the stress tests taking into account the factors ~~specified~~referred to in paragraph 1. The ~~guidelines shall be~~regulatory technical standards shall be reviewed and if required updated at least every year taking into account the latest market ~~developments.~~ and macro financial developments. 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.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 26 – paragraph 5

5. In addition to the marking to market method referred to in paragraphs 2 and 3 and marking to model method referred to in paragraph 4, the assets of a CNAV MMF may also be valued by using the amortised cost method. Amortised cost accounting shall be applied only where it is deemed to allow for an appropriate approximation of the price of the instrument. As the risk of mispricing increases with longer term underlying assets, the use of amortisation shall be restricted to instruments with low residual maturity and in the absence of any particular sensitivity of the instruments to market factors. A residual maturity of 90 days shall be considered to be the maximum. Materiality thresholds and escalation procedures shall be in place to ensure that corrective actions are promptly taken when the amortised cost no longer provides a reliable approximation of the price of the instruments: at the level of the overall portfolio, thresholds of 10 basis points shall be deemed to be appropriate.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 26 – paragraph 5 a (new)

5a. ESMA shall develop draft Regulatory technical standards specifying what instruments are to be considered as significantly vulnerable to market risks as referred to in paragraph 5. 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.

2015/01/09
Committee: ECON

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 monitored and published on the MMF website on a daily basis.

2015/01/09
Committee: ECON

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

(a) it has established a NAV buffers in accordance with the requirements in Article 30;

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 to fill the countercyclical buffer and with the financial strength of the entity expected to fund the replenishment;

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 buffers and the 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 buffers.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – title

NAV buffers

2015/01/09
Committee: ECON

Eva JOLY, Eva JOLY

Proposal for a regulation
Article 30 – paragraph 1 – subparagraph 1

Each CNAV MMF shall establish and maintain by 31 December 2015 a NAV buffer amounting at all times to at least 3% of the total value of the CNAV MMF's assets. The total value of the CNAV MMF's assets shall be calculated as the sum of the values of each asset of the MMF determined in accordance with Article 26(3) or (4). By [OJ please insert date: five years after entry into force of this Regulation], all CNAV MMF established, managed or marketed in the Union shall be converted into VNAV or a variable share constant CNAV MMF unless such a CNAV MMF applies for and obtains authorisation as a credit institution in accordance with Article 8 of Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and complies with the prudential requirements established in that Directive and in Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms .

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 1 – subparagraph 2

The NAV buffers shall be used exclusively to cover differences between the CNAV MMF's constant NAV per unit or share and the CNAV MMF's NAV per unit or share as laid down in Article 31.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 2

2. The amounts in the NAV buffers shall not be included in the calculation of the NAV or constant NAV of the CNAV MMF.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 3

3. The NAV buffers shall be composed only of cash.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 4 – subparagraph 1

The NAV buffers shall be held in a protected reserve account opened with a credit institution that fulfils the requirements in Article 11(c), in the name and on behalf of the MMF.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 4 – subparagraph 2

The reserve account shall be segregated from any other account of the MMF, from the accounts of the manager of the MMF, from the accounts of the other clients of the credit institution, and from the accounts of any other entity financing the NAV buffers.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 4 – subparagraph 3

The reserve account or any amounts in the reserve account shall not be subject to any pledge, lien or collateral arrangement. In the event of the insolvency of the manager of the MMF or of the credit institution where the account is opened or of any entity that financed the NAV buffers, the reserve account shall not be available for distribution among or realisation for the benefit of creditors of the insolvent entity.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 1

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. The escalation procedure shall be included in the recovery plan referred to in article 25.

2015/01/09
Committee: ECON

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 including, as appropriate, the actions identified to in the recovery plan referred to in article 25 to reduce the negative effects.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 2 – subparagraph 2

The CNAV MMF shall inform immediately the competent authority and ESMA as well as each investor thereof in writing and in a clear and comprehensible way.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 34 – paragraph 4

4. Following the notification in paragraph 2, the competent authority shall control that the NAV buffer has been replenished within any specified period by the competent authority or the MMF has ceased to hold itself as a CNAV MMF and informed accordingly its investors.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 34 – paragraph 4

4. Following the notification in paragraph 2, the competent authority shall control that the NAV buffer has been replenished within any specified period by the competent authority or the MMF has ceased to hold itself as a CNAV MMF and informed accordingly its investors.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 35 – paragraph 3 – subparagraph 1

External support shall mean a direct or indirect support offered by a third party 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. External support shall not be given by any sovereign, regional or local public authority.

2015/01/09
Committee: ECON

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 or ESMA 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:

2015/01/09
Committee: ECON

Proposal for a regulation
Article 36 – paragraph 1 a (new)

1a. External support shall not be given by any sovereign, regional or local public authority.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 36 – paragraph 2

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 and provided that any possible losses resulting from the external support would not put the support provider in a situation of early intervention as referred to in article 23 of Directive [BRRD] or of being failing or likely to fail as defined in Directive [BRRD].

2015/01/09
Committee: ECON

Proposal for a regulation
Article 36 – paragraph 2 a (new)

2a. Where the conditions referred to in paragraph 1 for receiving external support are fulfilled the competent authority shall inform all relevant authorities from other Member States, ESMA, EBA and the ESRB

2015/01/09
Committee: ECON

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. ESMA shall develop draft regulatory technical standards in order to specify the maximum amounts to be provided by means of external support as well as the conditions referred to in paragraph 1. 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.

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). The CNAV MMF shall publish on its website its NAV in accordance with paragraph 2a of article 38.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 38 – paragraph 2 – subparagraph 1 – point d a (new)

(da) the action plans referred to in article 25;

2015/01/09
Committee: ECON

Proposal for a regulation
Article 38 – paragraph 2 – subparagraph 2

If necessary and duly justified, competent authorities or ESMA may solicit additional information.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 38 – paragraph 2 a (new)

2a. In addition, for each MMF managed, the manager of the MMF shall disclose daily on a public website the following information: (a) daily and weekly liquid assets as of previous business day, with chart or graph showing six-month history; (b) previous day's net inflow or outflow, with chart or graph showing six-month history; (c) previous day's NAV per share, with chart or graph showing six-month history;

2015/01/09
Committee: ECON

Proposal for a regulation
Article 38 – paragraph 4 – subparagraph 2

ESMA shall collect the information to create a central database of all MMFs established, managed or marketed in the Union. The European Central Bank shall have right to access this database for statistical purposes only. On the basis of the information collected, ESMA shall publish an annual report identifying the main developments of MMF in the Union including inter alia its market size and the main features regarding assets and liabilities of EU MMFs.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 38 a (new)

Article 38 a Obligations concerning the remuneration policy of MMFs 1. The remuneration policy of MMFs shall be transparent. Accordingly, MMFs shall establish and apply remuneration policies and practices that are consistent with and that promote sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the MMF they manage. 2. The remuneration policies and practices shall cover fixed and variable components of salaries and discretionary pension benefits. 3. The variable component of salaries shall not exceed 100 % of the fixed component of the total remuneration for each individual. Member States may set a lower maximum percentage. 4. The remuneration policies and practices shall apply to those categories of staff, including employees and other members of staff such as, but not limited to, temporary or contractual staff, at fund or subfund level who are: (a) fund managers; (b) persons other than fund managers, who take investment decisions that affect the risk position of the fund; (c) persons other than fund managers, who have the power to exercise influence on staff, including investment policy advisors and analysts; (d) senior management, risk takers, personnel in control functions; and (e) any other employee or member of staff such as, but not limited to, temporary or contractual staff receiving total remuneration that falls within the remuneration bracket of senior management and decision takers and whose professional activities have a material impact on the risk profiles of the management companies or of the MMF they manage.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 1

1. ~~The competent authorities~~MMFs with more than EUR 10 billion of assets under management shall be supervised by ESMA on the compliance with this Regulation on an on-going basis. Other funds shall fall under the supervision of the competent authorities on an on-going basis.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 2

2. The competent authority of the MMF shall be responsible for ~~supervis~~ensuring compliance with the rules laid down in Chapters II to VII.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 40 – paragraph 1

1. Competent authorities and ESMA shall have all supervisory and investigatory powers that are necessary for the exercise of their functions pursuant to this Regulation.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 42 – title

Cooperation between authorities and ESMA binding mediation

2015/01/09
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 1

1. The competent authority of the MMF ~~and~~, the competent authority of the manager, if different and host competent authorities shall cooperate with each other and exchange information for the purpose of carrying out their duties under this Regulation.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 2

2. Competent authorities and ESMA shall cooperate with each other for the purpose of carrying out their respective duties under this Regulation in accordance with Regulation (EU) No 1095/2010. In case of disagreement between competent authorities regarding the implementation of this Regulation, any relevant home, host or the manager competent authority may request ESMA to proceed to a binding mediation in accordance with article 19 of Regulation [ESMA]

2015/01/09
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 3

3. Competent authorities ~~and~~, ESMA, EBA and the ESMARB shall exchange all information and documentation necessary to carry out their respective duties under this Regulation in accordance with Regulation (EU) No 1095/2010, in particular to identify and remedy breaches of this Regulation.

2015/01/09
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 1

1. Within the ~~six~~three 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 3 - introductory part

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 leastdeleted

2015/01/09
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 3 – point a

~~(a) 1% of the total value of the CNAV MMF's assets, within one year from the entry into force of this Regulation;~~deleted

2015/01/09
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 3 – point b

~~(b) 2% of the total value of the CNAV MMF's assets, within two years from the entry into force of this Regulation;~~deleted

2015/01/09
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 3 – point c

~~(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

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

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 buffers and the operation of the CNAV buffers 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