February 2017

The Regulation of the European Parliament and of the Council on Money Market Funds is a big name with some big implications for the way that money market funds in Europe are likely to be classified and structured.

This regulation is now well on its way to final approval in the coming weeks, which will start the clock ticking on an implementation period for MMFs managers – 18 months for existing funds and 12 months for new funds. For investors, the regulation provides a high degree of optionality for investing short-term cash.

There are two types of MMFs and three structural options from which to choose. Under the new rules, MMFs must be classified as either short-term or standard MMFs. Short-term funds are those that keep the existing conservative investment restrictions currently set out under the ESMA¹. Short-Term Money Market Fund definition. Meanwhile, Standards MMFs reflect the existing ESMA Money Market Fund definition.

When it comes to structure, short-term MMFs can be set up as Public Debt Constant Net Asset Value (CNAV), Low Volatility NAV (LVNAV) MMFs or Variable NAV (VNAV) MMFs. Conversely, standard MMFs can only be structured as VNAV.

As with any new regulatory reform, there’s a lot to take in – and some important decisions to make. We’re here to guide you through the implications step by step.

Visit our J.P. Morgan Global Liquidity MMF Resource Centre on our website www.jpmgloballiquidity.com where you can find more details on the regulation and what the new rules are likely to mean for money market fund investors.

1. European Securities and Markets Authority ↩