Activities of Roberto GUALTIERI related to 2013/0306(COD)
Plenary speeches (1)
Money market funds (debate) IT
Amendments (25)
Amendment 103 #
Proposal for a regulation
Recital 3
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 they may 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 MMF cannot always maintain the promise to redeem immediately and to preserve the principal value of a unit or share issued by the MMF to investors. This situation, that according to the FSB and the IOSCO can be particularly serious for the Constant or Stable NAV MMFs, may trigger massivesubstantial and sudden redemption requests, potentially caustriggering broader macroeconomic consequences.
Amendment 114 #
Proposal for a regulation
Recital 10
Recital 10
(10) In the absence of a Regulation setting out rules on MMFs, diverging measures might continue to be adopted at national level, which would continue to cause significant distortions of competition resulting from important differences in essential investment protection standards. Diverging requirements on portfolio composition, eligible assets, their maturity, liquidity and diversification, as well as on credit quality of issuers of money market instruments lead to different levels of investor protection because of the different levels of risk attached to the investment proposition associated with a money market fund. The failure to adopt strict common rules applicable to MMFs in the internal market prevents uniform investor protection and gives investors different incentives to redeem their investments and thereby trigger a run. It is therefore essential to avoid contagion into the short term funding market and to the sponsors of the MMF which would largely put at risk the stability of the Union's financial market by adopting a uniform set of rules. It is therefore essential to adopt a uniform set of rules in order to avoid contagion into the short term funding market and to the sponsors of the MMF which would largely put at risk the stability of the Union's financial market. In order to mitigate systemic risk, in addition to a number of requirements for all types of MMFs, the Constant Net Asset Value MMFs (CNAV MMFs) should be converted after a 1 year transition period into a new class of funds called Lower Volatility Net Assets Value Money Market Fund" (LVNAV MMF). LVNAV-MMFs are money market funds where the Net Asset Value per unit of share is rounded to the nearest ten basis point or its equivalent in currency term, and where income in the fund is accrued daily or can either be paid out to the investor. After 2 years following the 1 year transition period the LVNAV class of funds should be transformed into Variable NAV MMFs. The LVNAV includes liquidity fees and gates (conditional to the fund's Board of Directors decision); extensive disclosure and reporting requirements, including daily publication of the "shadow NAV"; high liquidity standards (i.e. 10% daily and 30% weekly liquid assets) and a limited use of amortized costs method, below the IOSCO recommendations (i.e.< 90 days). The valuation of both mark-to-market and mark-to-model prices should be provided by a third independent party (i.e. neither the fund itself nor its "sponsor"). LVNAV MMFs should not receive any form of external support. However, under "exceptional circumstances" the competent authority may allow the MMF to receive external support if the risk is considered by the competent authority a source of potential systemic risk (i.e. the risk is not idiosyncratic). The following Draft Regulation changes accordingly.
Amendment 176 #
Proposal for a regulation
Recital 45
Recital 45
Amendment 221 #
Proposal for a regulation
Recital 54
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.
Amendment 246 #
Proposal for a regulation
Article 2 – paragraph 1 – point 12 a (new)
Article 2 – paragraph 1 – point 12 a (new)
(12a) "Lower volatility Net Assets Value Money Market Fund" (LVNAV MMF) means a money market fund where the Net Asset Value per unit or share is rounded to the nearest ten basis point or its equivalent in currency term , and where income in the fund is either accrued daily or can be paid out to the investor;
Amendment 256 #
Proposal for a regulation
Article 2 – paragraph 1 – point 22 a (new)
Article 2 – paragraph 1 – point 22 a (new)
(22a) "External support "should be permitted only in exceptional circumstances by the competent authority in order to prevent systemic (not idiosyncratic) risks. "External support" means direct or indirect support offered by a third party that is intended for, or would result in, guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share of the MMF. External support shall include : (a) cash injections from a third party; (b) the purchase by a third party of assets of the MMF at an inflated price; (c) the purchase by a third party of units or shares of the MMF in order to provide liquidity to the fund; (d) the issuance by a third party of any kind of explicit or implicit guarantee, warranty or letter of support for the benefit of the MMF; (e) any action by a third party the direct or indirect objective of which is to maintain the liquidity profile and the NAV per unit or share of the MMF.
Amendment 289 #
Proposal for a regulation
Article 8 – paragraph 2 – point c
Article 8 – paragraph 2 – point c
(c) taking direct or indirect exposure to equityies or commodities, including via derivatives, certificates representing them, indices based on them or any other means or instruments that would give an exposure to them;
Amendment 290 #
Proposal for a regulation
Article 8 – paragraph 2 – point c a (new)
Article 8 – paragraph 2 – point c a (new)
(ca) repurchase agreements;
Amendment 291 #
Proposal for a regulation
Article 8 – paragraph 2 – point c b (new)
Article 8 – paragraph 2 – point c b (new)
(cb) reverse repo
Amendment 292 #
Proposal for a regulation
Article 8 – paragraph 2 – point c c (new)
Article 8 – paragraph 2 – point c c (new)
(cc) other MMFs
Amendment 295 #
Proposal for a regulation
Article 8 – paragraph 2 a (new)
Article 8 – paragraph 2 a (new)
2 a. Standard MMFs shall be allowed to invest in money market instruments with a residual maturity until the legal redemption date of less than or equal to 2 years, provided that the time remaining until the next interest rate reset date is less than or equal to 397 days. Floating rate money market instruments should reset to a money market rate or index. A repurchase agreement shall be eligible to be entered into by a MMF provided that all the following conditions are fulfilled: (a) assets used as collateral shall not be sold, re-invested or pledged; (b) the repurchase agreement is used on a temporary basis and not for investment purposes; (c) the MMF has the right to terminate the agreement at any time upon a notice of maximum two working days; (d) the cash received by the MMF as part of repurchase agreements shall not exceed 10% of its assets and shall not be transferred, re-invested or otherwise re- used;
Amendment 494 #
Proposal for a regulation
Article 25 – paragraph 1 – subparagraph 1
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 conduct stress testing every three months and develop action plans for different possible scenarios. In addition, in the case of LVNAV MMFs, the stress tests shall estimate for different scenarios the difference between the LVNAV MMF NAV per unit or share and the NAV per unit or share.
Amendment 514 #
Proposal for a regulation
Article 26 – paragraph 1
Article 26 – paragraph 1
1. The assets of a MMF shall be valued at least on a daily basis. The result of this valuation shall be published daily on the website of the MMF. The valuation based both through the mark-to-market and the mark-to-model method should be made by a third independent party (i.e. not the same MMF itself, its related asset manager or its "sponsor").
Amendment 527 #
Proposal for a regulation
Article 26 – paragraph 5
Article 26 – paragraph 5
5. Amortised cost accounting shall be applied only where it allows for an appropriate approximation of the price of the instrument. The use of amortisation shall be restricted to instruments with low residual maturity not exceeding 90 days and not presenting significant vulnerability to credit or market risks. Materiality thresholds of 10 basis points 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. In addition, a review of discrepancies between the market value and the amortised cost value of the money market instruments shall be carried out on a weekly basis. 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 CLVNAV MMF may also be valued by using the amortised cost method. with a residual maturity not exceeding 90 days may be valued by using the amortised cost method, provided that this will not result in a material discrepancy between the value of the instruments and the value calculated according with the amortised cost method.
Amendment 540 #
Proposal for a regulation
Article 27 – paragraph 4
Article 27 – paragraph 4
4. The ‘constant 'LVNAV per unit or share’' shall be calculated as the difference between the sum of all assets of a CLVNAV MMF and the sum of all liabilities of a CLVNAV MMF valued in accordance with the amortised cost method, divided by the number of outstanding units or shares of the CNAV MMF.
Amendment 543 #
Proposal for a regulation
Article 27 – paragraph 5
Article 27 – paragraph 5
5. The constant LVNAV per unit or share of a CLVNAV MMF mayshall be rounded to the nearest percentageten basis point or its equivalent when the NAV is published in a currency unit.
Amendment 548 #
Proposal for a regulation
Article 27 – paragraph 6
Article 27 – paragraph 6
6. The difference between the constant NAV per unit or share and NAV per unit or share of a CLVNAV MMF shall be continuously monitored.
Amendment 550 #
Proposal for a regulation
Article 27 – paragraph 6 a (new)
Article 27 – paragraph 6 a (new)
6a. After three years after the entry into force of this Regulation the LVNAVs should be transformed into Variable NAV MMFs.
Amendment 556 #
Proposal for a regulation
Article 28 – paragraph 2
Article 28 – paragraph 2
2. By way of derogation from paragraph 1, the units or shares of a CLVNAV MMF shall be issued or redeemed at a price that is equal to the MMF's constant LVNAV per unit or share.
Amendment 559 #
Proposal for a regulation
Chapter 5 – title
Chapter 5 – title
Specific requirements for CLVNAV MMFs
Amendment 563 #
Proposal for a regulation
Article 29 – title
Article 29 – title
Additional requirements for CLVNAV MMFs
Amendment 568 #
Proposal for a regulation
Article 29 – paragraph 1
Article 29 – paragraph 1
1. A MMF shall not use the amortised cost method for valuation, or advertise a constant NAV per unit or share, or round the constantround the NAV per unit or share to the nearest percentageten basis point or its equivalent when the NAV is published in a currency unit unless it has been explicitly authorised as a CLVNAV MMF.
Amendment 571 #
Proposal for a regulation
Article 29 – paragraph 2
Article 29 – paragraph 2
Amendment 707 #
Proposal for a regulation
Article 36 – paragraph 1 – introductory part
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 CLVNAV 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:
Amendment 797 #
Proposal for a regulation
Article 45 – paragraph 1 – introductory part
Article 45 – paragraph 1 – introductory part
By threewo 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 twhe 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 Statether changes should be made to the regime for LVNAV MMFs. The review shall: