April 2018

The wide-ranging scope of the upcoming changes to European money market fund (MMF) regulations should be enough to make most investors sit up and take notice. Quite simply, money market fund investors will need to be ready for the change, or risk losing out.

Take time to adapt to the new rules

We anticipate that our existing European-domiciled MMF range will transition to the new regulatory regime over the weekend of 30 November 2018, subject to regulatory approvals. This may still seem some time away, but investors will need plenty of time to adapt and work out which options are best for them under the new rules. This means starting the planning process as early as possible.

Fund providers have a particularly important role to play to ensure their clients have all the information they need and have plenty of time to review their investment options before their funds are converted to meet the new rules.

At J.P. Morgan Asset Management, we intend to write to all our MMF clients after the summer holidays, setting out the available options for their money market fund investments. Investors will then have until end of November 2018 to declare their choices.

MMF providers must also ensure the new regulations are formally implemented into the fund’s constitution (the Articles of Association). We will convene an extraordinary general meeting in April 2018 so that investors can vote to implement provisions on the Articles.

Understand the planned fund range options

The new regulations are wide ranging, but essentially they require MMF providers to make a number of changes to their funds in terms of structure, composition, valuation, liquidity requirements and information reporting.

Under the new European regulations, MMFs will be re-categorised into two fund types: Short-term MMFs and Standard MMs, with three structural options available to investors: Variable Net Asset Value (VNAV) MMFs, Public Debt Constant Net Asset Value (CNAV) MMFs (for government funds) and will create a new type of fund – Low Volatility Net Asset Value (LVNAV) MMF.

We anticipate the following options for short-term liquidity investing available to clients, subject to regulatory approval:

By allowing our clients complete optionality of the fund structures under the new regulations, we are well positioned to continue to offer investors a comprehensive range of products they need to achieve the benefits for short-term liquidity investing¹.

Choose a flexible investment policy

Corporate treasurers will need to start reviewing their investment policies as soon as possible to make sure that they have the time they need to make any necessary changes to their policies, and to ensure that they are able to take full advantage of the options available under the new European regulations as soon as they come into force.

To help guide you through the process, we’ve created a useful guide to writing and implementing an effective investment policy, which you can find online at www.jpmgloballiquidity.com/Investment Policy

Don’t delay, start planning today

If you are invested in European-domiciled MMFs, these funds will be re-categorised under the new regulations. At J.P. Morgan Asset Management, we aim to implement this change by 30 November 2018. Investors will need to take action to make sure they are ready for this change. They will need to vote on the Articles of Association, choose which new fund’s structures to go into, and update their internal investment policies.

As we head towards these important changes, planning ahead will be key. That’s why we’re determined to do everything we can to help corporate treasurers navigate their way through the new regulatory regime and achieve successful outcomes.

To find out more please visit our European MMF Regulations Resource Centre or you can contact us at any time with your questions at [email protected]

1. Please note that Investment in money market funds are not guaranteed. The value of investments may go down as well as up and investors may not get back the full amount invested.