[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

Burkhard BALZ

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

Burkhard BALZ

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

Burkhard BALZ

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 and VNAV MMFs should clearly explain to investors the ~~buffer mechanism they are applying to maintain the constant NAV per unit or share.~~ safeguards and additional requirements they are applying to ensure resilience during stressed market conditions and adequate redemption policies taking due account of the interest of all unit holders.

2013/12/12
Committee: ECON

Burkhard BALZ

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 portfolio~~and effectiveness of the valuation methodologies oin ~~debt issued by the Member States from the~~conjunction with the safeguards and additional requirements to ~~establish a capital buffer that amounts to at least 3 %~~address the robustness and crisis resilience of MMFs, as well as to assess the impact ofn the ~~total value of the CNAV MMF's asset~~financing and cash reserves management of European companies. Therefore, during the three years after the entry into force of this Regulation, the Commission should analyse the experience acquired in applying this Regulation and the impacts on the different economic aspects attached to the MMFs. The debt issued or guaranteed by the Member States represents a distinct category of investment displaying specific credit and liquidity traits. In addition, sovereign debt plays a vital role in financing the Member States. The Commission should evaluate the evolution of the market for sovereign debt issued or guaranteed by the Member States and the possibility to create a special framework for MMF that concentrate their investment policy on that type of debt.

2013/12/12
Committee: ECON

Burkhard BALZ

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

In order to ensure compliance with the thresholds in accordance with paragraph 1 points (c) and (d) and to take necessary precautions MMFs shall be obliged to implement comprehensive liquidity policies on a permanent basis that also anticipate situations of stressed market conditions and adverse market developments.

2013/12/12
Committee: ECON

Burkhard BALZ

Proposal for a regulation
Article 22 – paragraph 1 a (new)

1a. In order to ensure compliance with the thresholds in accordance with paragraph 1 points (c) and (d) and to take necessary precautions MMFs shall be obliged to implement comprehensive liquidity policies on a permanent basis that also anticipate situations of stressed market conditions and adverse market developments.

2013/12/12
Committee: ECON

Burkhard BALZ

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

Burkhard BALZ

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

Burkhard BALZ

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

Burkhard BALZ

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 an~~y use or replenishment of the NAV buffer and the conversion of the CNAV MMF~~ application of liquidity fees and a temporary suspension of redemptions, repurchases or subscriptions;

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

Activities of Burkhard BALZ related to 2013/0306(COD)

Plenary speeches (1)

Amendments (13)

ParlTrack - 2011-2024