Cash & Liquidity Management

European MMF Regulation: the countdown continues

Published: Dec 2017
J.P. Morgan Asset Management Thought for the Month – building stronger liquidity strategies – let's solve it.

December 2017

The countdown to implementation of the European Money Market Fund (MMF) Regulation is well underway, with just over a year left on the clock. As that deadline approaches, we’re as committed as ever to helping our clients get to grips with their choices under the new rules.

Which investment options are currently coming out on top?

So far, our clients are telling us that their top choice for government investment is the public debt Constant Net Asset Value (CNAV) MMF, while our credit or prime-style liquidity investors are opting for the Low Volatility Net Asset Value (LVNAV) structure. Whichever option they choose, our primary focus is to move our existing fund range over to the new structures in the least disruptive way possible for our clients.

Complementing the public debt CNAV and LVNAV structures, we’re also planning to introduce a range of Variable Net Asset Value (VNAV) short-term MMFs for clients who prefer the features offered by this structure under the new regulation, or who want to avoid the structured fees and gates that come with both the CNAV public debt and LVNAV MMFs.

What about cash and cash equivalents?

So what does the regulation say about MMFs treatment as cash and cash equivalents? The short answer is not a lot – much like the current rules – so we’re advising our clients to stay close to their external auditors when it comes to this topic.

That said, we have every reason to expect to continue offering our short-term MMFs, along with their existing focus on same-day liquidity, capital preservation and their external AAA MMF rating. Crucially, the new regulation looks set to take a more conservative line than the present one, which we believe should support the case for our short-term MMFs to be treated as cash and cash equivalent.

Four practical ways we’re helping our clients

We’re committed to helping clients prepare for the regulation in four practical ways. First, we’re supporting them as they weigh up the pros and cons of the fund structures presented in the new regulation. Second, we’re working closely with them as they make any necessary changes to their existing internal policies. Third, we’re helping them to review any operational set-up and reporting requirements. And fourth we’re doing everything we can to pave the way for a smooth transition for our clients as they implement their new fund offering.

Where to find out more

We’ve designed our European Money Market Fund Reform Resource Centre to give investors easy access to our latest thinking on the new regulation, with white papers on topics like investment policy, as well as helpful FAQs and summaries. As the implementation date draws nearer, we’re also continuing to support our clients by holding informative roundtables and presentations at key locations around the world as they get ready for the new regulation. For more information, please visit our website or feel free to reach out to us at

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