The Money Market Funds (Amendment) (EU Exit) Regulations 2019

Definitions

5.—(1) In Article 2—

(a) for point (2), substitute—

“(2) ‘money market instruments’ means instruments normally dealt in on the money market which—

(a) are liquid;

(b) have a value which can be accurately determined at any time; and

(c) satisfy the conditions set out in Article 2a(1);”;

(b) for point (3), substitute—

“(3) ‘transferable securities’ means instruments in the following categories which satisfy the conditions set out in Article 2a(4)—

(a) shares in companies and other securities equivalent to shares in companies;

(b) bonds and other forms of securitised debt; or

(c) any other negotiable securities which carry the right to acquire securities referred to in subparagraph (a) or (b) by subscription or exchange;”;

(c) in point (17)—

(i) in point (a), for “UCITS” both times it occurs, substitute “EEA UCITS”;

(ii) in point (b), for “EU AIF” substitute “EEA AIF”;

(iii) in point (c), for “non-EU AIF”, each time it occurs, substitute “non-EEA AIF”;

(d) for point (23) substitute—

“(23) ‘manager of an MMF’ means—

(a) in the case of an MMF that is a UK UCITS—

(i) if the UCITS is an investment company that has not designated a management company, the investment company; or

(ii) in all other cases, the management company (as defined in section 237(2) of FSMA, as amended from time to time) for that UCITS;

(b) in the case of an MMF that is an EEA UCITS treated as a recognised scheme under regulation 62 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019(1)—

(i) if the EEA UCITS has not designated an operator (as defined in section 237(2) of FSMA), the UCITS;

(ii) in all other cases, the operator of the EEA UCITS;

(c) in the case of an MMF that is an AIF, an AIFM or an internally managed AIF;”;

(e) after point (23) insert—

“(24) ‘AIF’ has the meaning given in regulation 3 of the AIFM Regulations(2), as amended from time to time;

(25) ‘AIFM’, in relation to an AIF, has the meaning given in regulation 4(1) of the AIFM Regulations, as amended from time to time;

(26) ‘UK AIF’ and ‘EEA AIF’ have the meanings given in regulation 2(1) of the AIFM Regulations, as amended from time to time;

(27) ‘UCITS’ has the meaning given in section 236A of FSMA(3), as amended from time to time;

(28) ‘UK UCITS’ has the meaning given in section 237(3) of FSMA, as amended from time to time;

(29) ‘EEA UCITS’ means a UCITS which is authorised pursuant to Article 5 of Directive 2009/65/EC in an EEA State;

(30) ‘EU MMF’ means an AIF or UCITS which was authorised as an MMF under the EU MMF Regulation (as it had effect immediately before exit day) by the competent authority of a Member State other than the United Kingdom, and that authorisation has not been withdrawn or cancelled;

(31) ‘temporary marketing permission’ means—

(a) for an EEA AIF, permission to market in the United Kingdom under regulation 78A(1) of the AIFM Regulations(4);

(b) for an EEA UCITS, permission to market in the United Kingdom by virtue of Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (temporary authorisation in connection with temporary recognition);

(32) ‘Regulation (EU) 600/2014’ means Regulation (EU) 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;

(33) ‘EU MMF Regulation’ means Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds(5) as it has effect in EU law;

(34) ‘Directive 2011/61/EU’ means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010(6);

(35) ‘Directive 2009/65/EC’ means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (“UCITS”)(7);

(36) ‘FSMA’ means the Financial Services and Markets Act 2000;

(37) ‘AIFM Regulations’ means the Alternative Investment Fund Managers Regulations 2013;

(38) ‘OEIC Regulations’ means the Open-Ended Investment Companies Regulations 2001;

(39) ‘FCA’ means the Financial Conduct Authority;

(40) ‘PRA’ means the Prudential Regulation Authority.

Any reference in this Regulation to a sourcebook is a reference to a sourcebook in the Handbook of Rules and Guidance published by the FCA under the FSMA as in force on exit day(8).”.

(2) After Article 2, insert—

“Article 2a Conditions for money market instruments and transferable securities

1.   An instrument satisfies the conditions in this paragraph if it—

(a) is a financial instrument within paragraph 2, and

(b) satisfies one of the criteria in paragraph 3.

2.   A financial instrument comes within this paragraph if it is—

(a) admitted to trading or dealt in on—

(i) a UK regulated market (within the meaning of Article 2(1)(13A) of Regulation (EU) 600/2014);

(ii) an EU regulated market (within the meaning of Article 2(1)(13B) of Regulation (EU) 600/2014 which operates regularly and is recognised and open to the public; or

(b) admitted to official listing on a stock exchange in a country other than the United Kingdom or a Member State;

(c) dealt in on a regulated market (within the meaning of Article 2(1)(13) of Regulation (EU) 600/2014) in a country other than the United Kingdom or a Member State which operates regularly and is recognised and open to the public provided that the choice of stock exchange or market has been approved by the FCA or is provided for in law or the fund rules or the instruments of incorporation of the investment company; or

(d) not admitted to trading.

3.   An instrument satisfies one of the criteria in this paragraph if—

(a) it has a maturity at issuance of up to and including 397 days;

(b) it has a residual maturity of up to and including 397 days;

(c) it undergoes regular yield adjustments in line with money market conditions at least every 397 days; or

(d) its risk profile, including credit and interest rate risks, corresponds to that of financial instruments which have a maturity referred to in point (a) or (b), or are subject to a yield adjustment referred to in point (c).

4.   Instruments satisfy the conditions in this paragraph if—

(a) the potential loss which a UCITS may incur with respect to holding those instruments is limited to the amount paid for them;

(b) their liquidity does not compromise the ability of a UCITS to comply with rule 6.2.16(3) of the Collective Investment Schemes sourcebook;

(c) reliable valuation is available for them—

(i) in the case of securities admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5, in the form of accurate, reliable and regular prices which are either market prices or prices made available by valuation systems independent from issuers;

(ii) in the case of other securities as referred to in paragraph 6 in the form of regular and accurate information to the UCITS on the security or, where relevant, on the portfolio of the security;

(d) appropriate information is available for them as follows—

(i) in the case of securities admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5, in the form of regular, accurate and comprehensive information to the market on the security or, where relevant, on the portfolio of the security;

(ii) in the case of other securities as referred to in paragraph 6, in the form of regular and accurate information to the UCITS on the security or, where relevant, on the portfolio of the security;

(e) they are negotiable;

(f) their acquisition is consistent with the investment objectives or the investment policy, or both, of the UCITS pursuant to the law of the United Kingdom which was relied on by the United Kingdom immediately before exit day to implement Directive 2009/65/EC;

(g) their risks are adequately captured by the risk management process of the UCITS.

5.   A recently issued security satisfies the conditions in this paragraph if—

(a) the terms of issue include an undertaking that an application will be made for admission to official listing on a stock exchange or to another regulated market (within the meaning of Article 2(1)(13) of Regulation (EU) 600/2014) which operates regularly and is recognised and open to the public, provided that the choice of stock exchange or market has been approved by the FCA or is provided for in law or the fund rules or the instruments of incorporation of the investment company; and

(b) the admission referred to in point (a) is secured within a year of issue.

6.   The securities referred to in this paragraph are—

(a) transferable securities or money market instruments which are not admitted to or dealt in on a regulated market as referred to in paragraph 2(a) or recently issued securities which satisfy the conditions in paragraph 5;

(b) precious metals or certificates representing them;

(c) ancillary liquid assets.”

(1)

S.I. 2019/325.

(2)

S.I. 2013/1773.

(3)

Inserted by S.I. 2019/325.

(4)

Regulation 78A was inserted by S.I. 2019/328.

(5)

OJ L169, 30.6.2017, p.8.

(6)

OJ L174, 1.7.2011, p.1.

(7)

OJ L302, 17.11.2009, p.32.

(8)

Sourcebooks made by the Financial Conduct Authority are available on https://www.fca.org.uk/handbook and copies of the rules referred to can be obtained from the Financial Conduct Authority, 12 Endeavour Square, London E20 1JN, where they are also available for inspection.