Cash & Liquidity Management

Looking ahead: European Money Market Fund Reform

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

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 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

All our content is free, just register below

As we move to a new and improved digital platform all users need to create a new account. This is very simple and should only take a moment.

Already have an account? Sign In

Already a member? Sign In

This website uses cookies and asks for your personal data to enhance your browsing experience. We are committed to protecting your privacy and ensuring your data is handled in compliance with the General Data Protection Regulation (GDPR).