Committee on Economic and Monetary Affairs. on the proposal for a regulation of the European Parliament and of the Council on Money Market Funds

Transcription

1 EUROPEAN PARLIAMT Committee on Economic and Monetary Affairs /0306(COD) AMDMTS Draft report Neena Gill (PE v02-00) on the proposal for a regulation of the European Parliament and of the Council on Money Market Funds (COM(2013)0615 C7-0263/ /0306(COD)) AM\ doc PE v02-00 United in diversity

2 AM_Com_LegReport PE v /127 AM\ doc

3 224 Mady Delvaux Article 1 paragraph 1 subparagraph 2 This Regulation applies to collective investment undertakings that require authorisation as UCITS under Directive 2009/65/EC or are AIFs under Directive 2011/61/EU, invest in short term assets and have as distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment. This Regulation applies to collective investment undertakings that require authorisation as UCITS under Directive 2009/65/EC or are AIFs under Directive 2011/61/EU, invest in short term assets and have as distinct or cumulative objectives offering returns in line with money market rates and preserving the value of the investment and label or market themselves as money market funds. Justification Only funds having the cumulative primary investment objectives of maintaining both the principal of the fund and providing a return in line with money market rates should be covered by the MMF regulation. The regulation should only target MMFs that intend to label or market themselves as MMFs. The amendment aims to avoid that the scope will unintentionally cover funds investing in short term commercial papers of a lesser quality compared to the requirements laid down in this regulation. Forcing such funds to comply with the regulation might cause a disruption in the short term financing of the real economy. This amendment is to be read jointly with the one suggested for Article Markus Ferber Article 1 paragraph 1 a (new) 1a. By entry of force of this Regulation, CNAV MMF shall only be allowed to operate as either EU public debt CNAV MMFs or Retail CNAV MMFs. AM\ doc 3/127 PE v02-00

4 Accordingly, all references in this Regulation to CNAV MMFs shall refer to both, EU public debt CNAV MMFs and Retail CNAV MMFs, unless otherwise specified. 226 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 1 paragraph 2 2. Member States shall not add any additional requirements in the field covered by this Regulation. deleted 227 Eva Joly on behalf of the Verts/ALE Group Article 1 paragraph 2 2. Member States shall not add any additional requirements in the field covered by this Regulation. deleted 228 Pervenche Berès PE v /127 AM\ doc

5 Article 1 paragraph 2 subparagraph 1 a (new) Member States in which CNAV MMF may be offered, shall apply Chapter V. 229 Brian Hayes Article 1 a (new) Article 1a Types of CNAV MMF As from the date of the entry into force of this Regulation, CNAV MMFs shall operate in the Union only as a (1) Government CNAV MMF, (2) Retail CNAV MMF or (3) a Low Volatility NAV MMF. All references in this Regulation to CNAV MMFs relate to Government CNAV MMFs, Retail CNAV MMFs and Low Volatility NAV MMFs, unless otherwise specified. 230 Alain Lamassoure, Alain Cadec Article 2 paragraph 1 point 2 (2) money market instruments means money market instruments as defined in (2) money market instruments means money market instruments as defined in AM\ doc 5/127 PE v02-00

6 Article 2(1)(o) of Directive 2009/65/EC; Article 2(1)(o) of Directive 2009/65/EC and Article 3 of Directive 2007/16/EC; Justification For the avoidance of doubts, it should be clarified that bonds with a residual maturity of no more than 397 days may fall under the definition of money market instruments. This can be achieved by a reference to directive 2007/16/CE of 19 March 2007defining the eligible assets of UCITS funds. 231 Thomas Mann Article 2 paragraph 1 point 2 (2) money market instruments means money market instruments as defined in Article 2(1)(o) of Directive 2009/65/EC; (2) money market instruments means money market instruments as defined in Article 2(1)(o) of Directive 2009/65/EC and Article 3(1) of Directive 2007/16/EC; Justification For avoidance of doubt, it should be clarified that bonds fall under the definition of money market instruments. This can be achieved by a reference to directive 2007/16/EC of 19 March 2007 defining the eligible assets of UCITS funds. 232 Eva Joly on behalf of the Verts/ALE Group Article 2 paragraph 1 point 2 (2) money market instruments means (2) 'money market instruments' means PE v /127 AM\ doc

7 money market instruments as defined in Article 2(1)(o) of Directive 2009/65/EC; transferable instruments referred to in Article 2(1)(o) of Directive 2009/65/EC normally dealt in on the money market, such as treasury and local authority bills, certificates of deposits, commercial papers, bankers' acceptances or mediumor short-term notes; 233 Jonás Fernández Article 2 paragraph 1 point 2 2) money market instruments means money market instruments as defined in Article 2(1)(o) of Directive 2009/65/EC; 2) money market instruments means money market instruments as defined in Article 2(1) of Directive 2009/65/EC, or in other words, instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time; Or. es Justification The text of the article quoted has been added for clarity. 234 Eva Joly on behalf of the Verts/ALE Group Article 2 paragraph 1 point 4 (4) repurchase agreement means any agreement in which one party transfers (4) repurchase agreement means any agreement in which one party purchases AM\ doc 7/127 PE v02-00

8 securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified; securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified; 235 Werner Langen, Brian Hayes, Pablo Zalba Bidegain Article 2 paragraph 1 point 7 a (new) (7a) "high quality liquid asset backed security" means a qualified asset-backed security referred to in Article 12, para. 1(a) meeting the requirements laid down in Article 13 of the Commission delegated regulation (EU) No... to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions based on Article 460 of Regulation (EU) No 575/2013 defined for a uniform specification to be eligible transferable assets of high liquidity and credit quality according to Article 416, para. 1(d) of Regulation (EU) No 575/2013; 236 Petr Ježek, Sylvie Goulard, Philippe De Backer Article 2 paragraph 1 point 8 (8) corporate debt means debt instruments issued by an undertakings which is effectively engaged in producing (8) corporate debt means debt instruments issued by an undertakings which is effectively engaged in producing PE v /127 AM\ doc

9 or trading in goods or non-financial services; and/or financing the manufacturing, trading or providing of goods and nonfinancial services to the market. For the purpose of this definition, it should be understood, that debt instrument such as trade receivables, auto loans and leases, equipment loans and leases, SME loans of such undertakings are eligible provided they otherwise comply with the conditions set out in this Regulation; 237 Alain Lamassoure, Alain Cadec Article 2 paragraph 1 point 8 (8) corporate debt means debt instruments issued by an undertakings which is effectively engaged in producing or trading in goods or non-financial services; (8) "eligible debt" means debt instruments issued by entities or undertakings effectively engaged in producing and/or financing the manufacturing, trading or providing goods and non-financial services to the market including corporate debt. For the purpose of this definition, it should be understood, that entities such as captive finance subsidiaries are consistent with this definition and that debt instruments such as trade receivables, auto loans and leases, equipment loans and leases, SME loans and consumer loans of such undertakings are eligible provided they otherwise comply with the conditions set out in this Regulation. 238 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo AM\ doc 9/127 PE v02-00

10 Article 2 paragraph 1 point 11 (11) amortised cost method means a valuation method which takes the acquisition cost of an asset and adjusts this value for amortisation of premiums (or discounts) until maturity; (11) amortised cost method means a valuation method which takes the acquisition cost of an asset and adjusts this value for amortisation of premiums (or discounts) until maturity; the use of this accounting method shall be subject to approval of national competent authorities; 239 Alain Lamassoure, Alain Cadec Article 2 paragraph 1 point 12 (12) constant Net Assets Value Money Market Fund (CNAV MMF) means a money market fund that maintains an unchanging value NAV per unit or share; where income in the fund is accrued daily or can either be paid out to the investor, and where assets are generally valued according to the amortised cost method or the NAV is rounded to the nearest percentage point or its equivalent in currency term; deleted 240 Mady Delvaux Article 2 paragraph 1 point 12 PE v /127 AM\ doc

11 (12) constant Net Assets Value Money Market Fund (CNAV MMF) means a money market fund that maintains an unchanging value NAV per unit or share; where income in the fund is accrued daily or can either be paid out to the investor, and where assets are generally valued according to the amortised cost method or the NAV is rounded to the nearest percentage point or its equivalent in currency term; (12) constant Net Assets Value Money Market Fund (CNAV MMF) means a money market fund that seeks to maintain an unchanging net asset value (NAV) per unit or share; where income in the fund is accrued daily and can either be paid out to the investor or used to purchase more units in the funds; and where assets are generally valued according to the amortised cost method and the NAV is rounded to the nearest percentage point or its equivalent in currency term; Justification This definition should be redrafted in line with the CESR guidelines that add clarity and is widely recognised by both regulators and the industry. 241 Eva Joly on behalf of the Verts/ALE Group Article 2 paragraph 1 point 12 (12) constant Net Assets Value Money Market Fund (CNAV MMF) means a money market fund that maintains an unchanging value NAV per unit or share; where income in the fund is accrued daily or can either be paid out to the investor, and where assets are generally valued according to the amortised cost method or the NAV is rounded to the nearest percentage point or its equivalent in currency term; (12) "constant Net Assets Value Money Market Fund" (CNAV MMF) means a money market fund that maintains an unchanging value NAV per unit or share; where income in the fund is accrued daily or can either be paid out to the investor, and where assets are generally valued according to the amortised cost method or the NAV is rounded to the nearest percentage point or its equivalent in currency term; "a variable share constant CNAV MMF means an MMF which in order to maintain a stable net asset value AM\ doc 11/127 PE v02-00

12 per share, cancels an appropriate number of shares when asset values decline or net investment income is negative", 242 Brian Hayes Article 2 paragraph 1 point 12 a (new) (12a) "Retail CNAV MMF" means a CNAV MMF that is available for subscription only to charities, non-profit organisations, public authorities, public foundations and natural persons, including any account for which the ultimate beneficiary is a natural person; Justification The definition of a Retail CNAV MMF should be sufficiently broad to capture the beneficial owners of the investments who are non-professional in nature but may be investing on intermediated basis. Retail CNAV MMFs will be subject to the comprehensive requirements of the Regulation, including a very stringent system of liquidity fees and redemption gates that will be applied in times of serious stress. 243 Neena Gill Article 2 paragraph 1 point 12 a (new) (12a) "Retail Constant Net Asset Value Money Market Fund" (Retail CNAV MMF) means a CNAV MMF that is PE v /127 AM\ doc

13 available for subscription only to charities, non-profit organisations, public authorities and public foundations, 244 Markus Ferber Article 2 paragraph 1 point 12 a (new) (12a) "Retail Constant Net Asset Value Money Market Fund" (Retail CNAV MMF) means a CNAV MMF that is available for subscription only to charities, non-profit organisations, public authorities and public foundations. 245 Alain Lamassoure, Alain Cadec Article 2 paragraph 1 point 12 a (new) (12a) "Short-term MMF" means a money market fund that invests in eligible money market instruments referred to in Article 9(1); 246 Roberto Gualtieri AM\ doc 13/127 PE v02-00

14 Article 2 paragraph 1 point 12 a (new) (12a) "Lower volatility Net Assets Value Money Market Fund" (LVNAV MMF) means a money market fund where the Net Asset Value per unit or share is rounded to the nearest ten basis point or its equivalent in currency term, and where income in the fund is either accrued daily or can be paid out to the investor; 247 Markus Ferber Article 2 paragraph 1 point 12 b (new) (12b) "EU public debt CNAV MMF" means a CNAV MMF which invests at least 80% of its assets in EU public debt instruments by 2020; 248 Brian Hayes Article 2 paragraph 1 point 12 b (new) (12b) "Low Volatility NAV MMF" means a MMF that is available for subscription to all investors but which: (a) is not permitted to utilise the amortised cost PE v /127 AM\ doc

15 method of valuation for non-government Securities with remaining maturities greater than 90 days and, (b) may not invest more than 25% of its NAV in non- Government Securities with remaining maturities greater than 90 days; Justification The Low Volatility NAV MMF provides an alternative to existing CNAV structures in order to address concerns relating to systemic risk and investor protection. Amortised cost accounting would not be permitted for non-government securities with a remaining maturity of greater than 90 days. Such instruments must be valued using a mark-to-market or mark-to-model methodology. Low Volatility NAV MMFs will be subject to the comprehensive requirements of the Regulation, including a very stringent system of liquidity fees and redemption gates that will be applied in times of serious stress and are limited to investing up to 25% of NAV in non-government Securities with a remaining maturity of more than 90 days to ensure their low volatility. 249 Markus Ferber Article 2 paragraph 1 point 12 c (new) (12c) "EU public debt instruments" shall be defined as public debt instruments that are cash, government assets or reverse repos secured with government debt of the Member States; 250 Jakob von Weizsäcker, Udo Bullmann, Peter Simon Article 2 paragraph 1 point 16 point c a (new) AM\ doc 15/127 PE v02-00

16 (ca) with respect to Article 15a of this Regulation the authority designated by a Member State in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and Directive 2013/36/EU for credit institutions in the MMF's home Member State; Justification MMFs have been identified by the FSB as belonging to the shadow banking universe because they perform bank-like activities. MMFs accept funding with deposit-like characteristics, perform maturity and liquidity transformation as banks do and undergo credit risk transfer as banks. The only difference is that they currently do not have bank status. Therefore, banking supervisors should be entitled to counter the respective risks with the measures that are deemed appropriate for those risks elsewhere. 251 Jakob von Weizsäcker, Peter Simon, Udo Bullmann Article 2 paragraph 1 point 16 point c b (new) (cb) With respect to Article 15a and if the authority referred to in point c a is located in a participating Member State and any of the following conditions is met: (i) the total value of the MMF's assets exceeds EUR 10 billion or (ii) following a notification by any competent authority that it considers such a fund of significant relevance with regard to the domestic financial stability or economy, the ECB takes a decision confirming such significance following a PE v /127 AM\ doc

17 comprehensive assessment by the ECB of that fund, the SSM and within the SSM the ECB as described in Regulation (EU) No 1024/2013 may, on behalf of its own assessment of necessity, act as the competent authority as regards to this Regulation and, thereby, contribute to undistorted conditions of competition within the financial sector. Justification MMFs accept funding with deposit-like characteristics, perform maturity and liquidity transformation as banks do and undergo credit risk transfer as banks. The only difference is that they do not have bank status. Therefore, the banking supervisors should have the option to act as the competent authority. A certain size and significance justify the competency of the ECB instead of the national competent authority to contribute to undistorted conditions of competition within the internal market. 252 Eva Joly on behalf of the Verts/ALE Group Article 2 paragraph 1 point 17 a (new) (17a) "MMF Host Member State" means the Member States where a significant proportion of MMF units or shares are marketed; 253 Peter Simon, Anneliese Dodds Article 2 paragraph 1 point 22 a (new) AM\ doc 17/127 PE v02-00

18 (22a) "asset-backed securities of high liquidity and credit quality" means assets meeting the requirements laid down in Article 13 of the Commission delegated regulation [No.../...] to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions; 254 Neena Gill Article 2 paragraph 1 point 22 a (new) (22a) "EU public debt CNAV MMF" means a CNAV MMF which, by 2020, invests at least 60% of its assets in EU public debt instruments as defined in point (22c). EU public debt CNAV MMF should build up this investment in public debt gradually. The European Commission shall make a progress report after 3 years. 255 Jakob von Weizsäcker, Peter Simon, Udo Bullmann Article 2 paragraph 1 point 22 a (new) (22a) 'participating Member State' means a Member State whose currency is the PE v /127 AM\ doc

19 euro or a Member State whose currency is not the euro which has established a close cooperation in accordance with Article 7 of Regulation (EU) No 1024/ Roberto Gualtieri Article 2 paragraph 1 point 22 a (new) (22a) "External support "should be permitted only in exceptional circumstances by the competent authority in order to prevent systemic (not idiosyncratic) risks. "External support" means direct or indirect support offered by a third party that is intended for, or would result in, guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share of the MMF. External support shall include : (a) cash injections from a third party; (b) the purchase by a third party of assets of the MMF at an inflated price; (c) the purchase by a third party of units or shares of the MMF in order to provide liquidity to the fund; (d) the issuance by a third party of any kind of explicit or implicit guarantee, warranty or letter of support for the benefit of the MMF; (e) any action by a third party the direct or indirect objective of which is to maintain the liquidity profile and the NAV per unit or share of the MMF. AM\ doc 19/127 PE v02-00

20 257 Brian Hayes Article 2 paragraph 1 point 22 a (new) (22a) "Government CNAV MMF" means a CNAV MMF which within 12 months of the adoption of this Regulation invests 99.5% of its assets in Government Securities, as defined in point (22b) and is subject to the diversification requirements outlined in Article 14(6). 258 Brian Hayes Article 2 paragraph 1 point 22 b (new) (22b) "Government Securities" means public debt instruments that are cash, government assets or reverse repos secured with government debt of any eligible sovereign, as determined by the manager of the MMF. Justification Eligible securities need to include EU and non-eu public debt in order to make the Government CNAV MMF a viable product option. Given the scarcity of eligible EU government debt relative to the size of the market and the displacement of the existing CNAV MMF population, any Government CNAV MMF needs to allow for investment in high quality government securities issued outside of the EU, subject to strict credit quality criteria to be defined by ESMA. PE v /127 AM\ doc

21 259 Jonás Fernández Article 2 paragraph 1 point 22 b (new) 22b) Member State public debt instruments means public debt instruments that are cash, government assets or reverse repurchase agreements secured with public debt of Member States. EU public debt instruments means public debt instruments that are cash, government assets or reverse repurchase agreements secured with public debt of the institutions of the EU or its agencies or agents, including among others the European Central Bank, the European stability mechanism, the European Investment Bank, the European Investment Fund and the European Fund for Strategic Investments; Or. es 260 Jonás Fernández Article 2 paragraph 1 point 22 c (new) 22c) money market means a market where short-term loan operations are conducted and assets such as public debt securities, corporate debt securities, repurchase agreements and depository receipts are traded. Or. es AM\ doc 21/127 PE v02-00

22 261 Eva Joly on behalf of the Verts/ALE Group Article 2 paragraph 1 a (new) ESMA shall develop draft regulatory technical standards specifying the definitions of paragraph 1. ESMA shall submit those draft regulatory technical standards to the Commission by 31 December Power is conferred on the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/ Eva Joly on behalf of the Verts/ALE Group Article 3 paragraph 1 subparagraph 1 a (new) An MMF or an MMF manager may be established in a third country or jurisdiction provided that that third country or jurisdiction is not a country or jurisdiction: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in PE v /127 AM\ doc

23 legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, or - which acts as an offshore financial centre. 263 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 3 paragraph 1 subparagraph 1 a (new) An MMF or an MMF manager may be established in a third country provided that the third country is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre. 264 Eva Joly on behalf of the Verts/ALE Group Article 3 paragraph 1 a (new) AM\ doc 23/127 PE v02-00

24 1 a. An MMF or an MMF manager may be established in a third country or jurisdiction provided that that third country or jurisdiction is not a country or jurisdiction: - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, or - which acts as an offshore financial centre. - which does not provide for tax measures which entail no or nominal taxes or where advantages are granted even without any real economic activity and substantial economic presence within the third country offering such tax advantages; - which has appropriate cooperation arrangements with the competent authorities of the home Member State of the MMF manager which entails that an efficient exchange of information can be ensured allowing competent authorities to carry out their duties in accordance with this Regulation; - which is not listed as a Non-Cooperative Country and Territory by FATF; - which has signed an agreement with the home Member State of the MMF manager and with each other Member State in which the units or shares of the MMF are intended to be marketed, so that it is ensured that the third country fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of PE v /127 AM\ doc

25 information in tax matters, including any multilateral tax agreements; 265 Eva Joly on behalf of the Verts/ALE Group Article 3 paragraph 2 2. A collective investment undertaking that requires authorisation as a UCITS under Directive 2009/65/EC shall be authorised as a MMF as part of the authorisation procedure pursuant to Directive 2009/65/EC. 2. A collective investment undertaking that requires authorisation as a UCITS under Directive 2009/65/EC shall be authorised as a MMF as part of the authorisation procedure pursuant to Directive 2009/65/EC provided that it performs MMF activities pursuant to this Regulation within 12 months after its authorisation. 266 Eva Joly on behalf of the Verts/ALE Group Article 3 paragraph 5 point f (f) any other information or document requested by the competent authority of the MMF to verify compliance with the requirements of this Regulation. (f) any other information or document requested by the competent authority of the home or host MMF to verify compliance with the requirements of this Regulation. AM\ doc 25/127 PE v02-00

26 267 Brian Hayes Article 3 paragraph 7 a (new) 7 a. Without prejudice to Article 3, paragraph 1, a Member State shall not be required to authorise a CNAV MMF. Justification The Regulation will provide a uniform set of minimum standards for MMFs, including CNAV MMFs, but the Regulation is not intended to require Member States to authorise CNAV MMFs. In order to ensure clarity, this principle is reflected in Article 3, par. 7a. 268 Eva Joly on behalf of the Verts/ALE Group Article 3 paragraph 7 a (new) 7 a. In order to ensure uniform conditions of application of this Article, ESMA shall develop draft implementing technical standards defining the format of information to be provided in accordance with paragraphs 5, 6 and 7. ESMA shall submit those draft implementing technical standards to the Commission by 31 December Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010. PE v /127 AM\ doc

27 269 Eva Joly on behalf of the Verts/ALE Group Article 4 paragraph 1 1. An AIF shall be authorised as a MMF only if its competent authority has approved the application of an AIFM authorised under Directive 2011/61/EU to manage the AIF, the fund rules and the choice of the depositary. 1. An AIF shall be authorised as a MMF only if its competent authority has approved the application of an AIFM authorised under Directive 2011/61/EU to manage the AIF, the fund rules and the choice of the depositary provided that it performs MMF activities pursuant to this Regulation within 12 months after its authorisation. 270 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 4 paragraph 1 subparagraph 1 a (new) An AIF MMF or an AIFM of a MMF may be established in a third country provided that the third country is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, AM\ doc 27/127 PE v02-00

28 - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre. 271 Eva Joly on behalf of the Verts/ALE Group Article 4 paragraph 1 a (new) 1 a. An AIF MMF or an AIFM of a MMF may be established in a third country or jurisdiction provided that the third country or jurisdiction is not a country: - where there are no or nominal taxes, - where there is a lack of effective exchange of information with foreign tax authorities, - where there is a lack of transparency in legislative, judicial or administrative provisions, - where there is no requirement for a substantive local presence, - which acts as an offshore financial centre. 272 Eva Joly on behalf of the Verts/ALE Group Article 4 paragraph 2 a (new) PE v /127 AM\ doc

29 2 a. In order to ensure uniform conditions of application of paragraph 2, ESMA shall develop draft implementing technical standards defining the format of information to be provided in accordance with paragraphs 2. ESMA shall submit those draft implementing technical standards to the Commission by 31 December Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/ Mady Delvaux Article 5 paragraph 1 subparagraph 2 A UCITS or AIF shall use a designation that suggests a money market fund or use terms such as cash, liquid, money, ready assets, deposit-like or similar words only where they have been authorised in accordance with this Regulation. deleted Justification Terms such as cash and liquid are used in the denomination of many funds other than MMFs without any risk of confusion as to the true nature of these funds. A fund investing primarily in very high quality and liquid government bonds should be allowed to use the term liquid in its denomination. Prohibiting the use of similar words creates legal uncertainty AM\ doc 29/127 PE v02-00

30 with respect to the terms funds may use in their designation, in particular considering that even widely used terms such as cash and liquid may not be used by non MMF. This amendment is to be read jointly with the one suggested for article Thomas Mann Article 5 paragraph 1 subparagraph 2 A UCITS or AIF shall use a designation that suggests a money market fund or use terms such as cash, liquid, money, ready assets, deposit-like or similar words only where they have been authorised in accordance with this Regulation. deleted Justification 275 Mady Delvaux Article 5 paragraph 2 2. The use of the designation money market fund, MMF or of a designation that suggests a MMF or the use of terms referred to in paragraph 1 shall comprise its use in any external or internal documents, reports, statements, advertisements, communications, letters or any other material addressed to or intended for distribution to prospective investors, unit-holders, shareholders or competent 2. The use of the designation money market fund or MMF shall comprise its use in any external or internal documents, reports, statements, advertisements, communications, letters or any other material addressed to or intended for distribution to prospective investors, unitholders, shareholders or competent authorities in written, oral, electronic or PE v /127 AM\ doc

31 authorities in written, oral, electronic or any other form. any other form. Justification Please refer to the justification to the amendment in article 5, paragraph 1, 2nd subparagraph. 276 Mady Delvaux Article 6 paragraph 4 4. The manager of the MMF shall be responsible for ensuring compliance with this Regulation. The manager shall be liable for any loss or damage resulting from non-compliance with this Regulation. 4. The manager of the MMF shall be responsible for ensuring compliance with this Regulation. Justification The second sentence should be deleted in order to be consistent with the provisions laid down in the UCITS and AIFM directives that both cover already the liability of the manager. 277 Eva Joly on behalf of the Verts/ALE Group Article 6 paragraph 5 5. This Regulation shall not prevent MMFs from applying investment limits that are 5. This Regulation shall not prevent MMFs from applying investment limits that are AM\ doc 31/127 PE v02-00

32 stricter than those required by this Regulation. stricter than those required by this Regulation. In such case the MMF shall inform the competent authority of the stricter investment limits applied. 278 Jonás Fernández Article 8 paragraph 1 point a a (new) (aa) Financial instruments issued or guaranteed separately or jointly by the national, regional and local administrations of the Member States or their central banks, or by the institutions of the EU or its agencies or agents, including among others the European Central Bank, the European Investment Bank, the European Investment Fund, the new European Fund for Strategic Investments or the European stability mechanism, the International Monetary Fund, the International Bank for Reconstruction and Development, the Council of Europe Development Bank and the European Bank for Reconstruction and Development. Or. es Justification It is important to make it clear that public debt is an asset that MMFs can purchase. 279 Marco Valli, Marco Zanni PE v /127 AM\ doc

33 Article 8 paragraph 1 point c (c) financial derivative instruments; (c) financial derivative instruments other than OTC derivatives whose sole purpose is to hedge the duration and exchange risks inherent in other MMF investments; Or. it 280 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 8 paragraph 1 point c (c) financial derivative instruments; (c) financial derivative instruments used exclusively for hedging purposes; 281 Petr Ježek, Sylvie Goulard Article 8 paragraph 1 point d (d) reverse repurchase agreements; (d) reverse repurchase and repurchase agreements provided that the cash received is not reinvested and the aggregate exposure to repurchase agreements does not exceed 10% of the assets of a MMF; AM\ doc 33/127 PE v02-00

34 Justification 282 Mady Delvaux Article 8 paragraph 1 point d a (new) (da) units of other MMFs authorised under this Regulation; Justification Funds of funds are authorised by both the AIFMD and UCITS directives. Therefore, MMF s subject to the requirements of this regulation shall be eligible as an investment by a MMF. 283 Petr Ježek, Sylvie Goulard Article 8 paragraph 1 point d a (new) (da) units or shares of other MMFs; 284 Alain Lamassoure, Alain Cadec Article 8 paragraph 1 point d a (new) PE v /127 AM\ doc

35 (da) repurchase agreements; 285 Frank Engel Article 8 paragraph 1 point d a (new) (da) High-quality securitisation instruments; Or. fr 286 Frank Engel Article 8 paragraph 1 point d b (new) (db) Existing high-quality MMFs; Or. fr 287 Alain Lamassoure, Alain Cadec Article 8 paragraph 1 point d b (new) (db) units or shares of other MMFs; AM\ doc 35/127 PE v02-00

36 Justification MMFs should be permitted to invest in units or shares of other MMFs, as currently allowed under the UCITS directive, subject to a set of conditions to be set out in a new article 13bis. Investing in units or shares of MMFs is an extremely useful way for MMFs to manage their treasury, due to the intrinsic liquidity of such assets which allows a great flexibility in the day to day management of subscriptions/redemptions. It is crucial for MMFs to continue to have access to this flexible liquidity tool. 288 Eva Joly on behalf of the Verts/ALE Group Article 8 paragraph 2 point c (c) taking direct or indirect exposure to equity or commodities, including via derivatives, certificates representing them, indices based on them or any other mean or instrument that would give an exposure to them; (c) taking direct or indirect exposure to equity, bonds, ETFs or commodities, including via derivatives, certificates representing them, indices based on them or any other mean or instrument that would give an exposure to them; 289 Roberto Gualtieri Article 8 paragraph 2 point c (c) taking direct or indirect exposure to equity or commodities, including via derivatives, certificates representing them, indices based on them or any other mean or instrument that would give an exposure to them; (c) taking direct or indirect exposure to equities or commodities, including via derivatives, certificates representing them, indices based on them or any other means or instruments that would give an exposure to them; PE v /127 AM\ doc

37 290 Roberto Gualtieri Article 8 paragraph 2 point c a (new) (ca) repurchase agreements; 291 Roberto Gualtieri Article 8 paragraph 2 point c b (new) (cb) reverse repo 292 Roberto Gualtieri Article 8 paragraph 2 point c c (new) (cc) other MMFs 293 Petr Ježek, Sylvie Goulard AM\ doc 37/127 PE v02-00

38 Article 8 paragraph 2 point d (d) entering into securities lending agreements or securities borrowing agreements, and repurchase agreements, or any other agreement that would encumber the assets of the MMF; (d) entering into securities lending agreements or securities borrowing agreements, or any other agreement that would encumber the assets of the MMF; Justification idea is to allow repurchase agreements 294 Eva Joly on behalf of the Verts/ALE Group Article 8 paragraph 2 point e (e) borrowing and lending cash. deleted 295 Roberto Gualtieri Article 8 paragraph 2 a (new) 2 a. Standard MMFs shall be allowed to invest in money market instruments with a residual maturity until the legal redemption date of less than or equal to 2 years, provided that the time remaining PE v /127 AM\ doc

39 until the next interest rate reset date is less than or equal to 397 days. Floating rate money market instruments should reset to a money market rate or index. A repurchase agreement shall be eligible to be entered into by a MMF provided that all the following conditions are fulfilled: (a) assets used as collateral shall not be sold, re-invested or pledged; (b) the repurchase agreement is used on a temporary basis and not for investment purposes; (c) the MMF has the right to terminate the agreement at any time upon a notice of maximum two working days; (d) the cash received by the MMF as part of repurchase agreements shall not exceed 10% of its assets and shall not be transferred, re-invested or otherwise reused; 296 Peter Simon, Anneliese Dodds Article 9 paragraph 1 point b introductory part (b) it displays one of the following alternative characteristics: (b) it is in the form of asset-backed securities of high liquidity and credit quality in line with the requirements laid down in Article 13 of the Commission delegated regulation [No.../...] to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions or it displays one of the following alternative characteristics: AM\ doc 39/127 PE v02-00

40 Justification MMFs should not be prevented from investing in instruments which are important as a method for financing lending to SMEs and consumers, namely certain consumer credit ABSs. MMFs should be able to invest in categories of underlying assets that have performed well during the crisis and demonstrated a good liquidity and credit track-record. This shall enable MMFs to maintain their role in financing the real economy. 297 Werner Langen, Brian Hayes, Pablo Zalba Bidegain Article 9 paragraph 1 point b point ii a (new) (iia) it is eligible as high quality liquid asset backed security referred to in Article 2, paragraph 7(a). 298 Jonás Fernández Article 9 paragraph 1 point c c) the issuer of the money market instrument has been awarded one of the two highest internal rating grades according to the rules laid down in Articles 16 to 19 of this Regulation. c) the issuer of the money market instrument has been awarded one of the two highest internal rating grades according to the rules laid down in Article 18 of this Regulation. Or. es 299 Marco Valli, Marco Zanni PE v /127 AM\ doc

41 Article 9 paragraph 1 point d (d) Where it takes exposure to a securitisation, it shall be subject to the additional requirements laid down in Article 10. deleted Or. it 300 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 9 paragraph 1 point d (d) Where it takes exposure to a securitisation, it shall be subject to the additional requirements laid down in Article 10. deleted 301 Markus Ferber Article 9 paragraph 1 point d (d) Where it takes exposure to a securitisation, it shall be subject to the additional requirements laid down in Article 10. (d) Where it takes exposure to a securitisation, it shall be subject to the requirements laid down in Article 10 AM\ doc 41/127 PE v02-00

42 302 Peter Simon, Anneliese Dodds Article 9 paragraph 2 2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 397 days or on a more frequent basis while not having a residual maturity exceeding 2 years. 2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 397 days or on a more frequent basis while not having a residual maturity exceeding 2 years or qualifying as asset-backed securities of high liquidity and credit quality complying with the requirements laid down in Article 13 of the Commission delegated regulation [No.../...] to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions; Justification MMFs should not be prevented from investing in instruments which are important as a method for financing lending to SMEs and consumers, namely certain consumer credit ABSs. MMFs should be able to invest in categories of underlying assets that have performed well during the crisis and demonstrated a good liquidity and credit track-record. This shall enable MMFs to maintain their role in financing the real economy. 303 Petr Ježek, Sylvie Goulard Article 9 paragraph 2 2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 2. Standard MMFs shall be allowed to invest in a money market instrument with a residual maturity until the legal redemption date not exceeding 2 years PE v /127 AM\ doc

43 397 days or on a more frequent basis while not having a residual maturity exceeding 2 years. provided that the time remaining until the next interest rate reset date is less or equal to 397 days. This feature corresponds either to a two-year floating rate security or to a two-year fixed rate security coupled with an interest rate hedging arrangement that reset to a money market rate (or index). Justification 304 Werner Langen, Brian Hayes, Pablo Zalba Bidegain Article 9 paragraph 2 2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 397 days or on a more frequent basis while not having a residual maturity exceeding 2 years. 2. Standard MMFs shall be allowed to invest in a money market instrument that undergoes regular yield adjustments in line with money market conditions every 397 days or on a more frequent basis while either not having a residual maturity exceeding 2 years or being eligible as high quality liquid asset backed security referred to in Article 2, paragraph 7(a). 305 Marco Valli, Marco Zanni Article 10 AM\ doc 43/127 PE v02-00

44 Article 10 Eligible securitisations 1. A securitisation shall be considered as eligible provided that all of the following conditions are met: (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (b) the underlying corporate debt is of high credit quality and liquid; (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. 2. For the purpose of a consistent application of paragraph 1, ESMA shall develop draft regulatory technical standards specifying: (a) the conditions and circumstances under which the underlying exposure or pool of exposures is considered to exclusively consist of corporate debt; (b) conditions and numerical thresholds determining when corporate debt is of high credit quality and liquid. ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by [ ]. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. deleted Or. it 306 Werner Langen, Brian Hayes, Pablo Zalba Bidegain PE v /127 AM\ doc

45 Article 10 paragraph 1 1. A securitisation shall be considered as eligible provided that all of the following conditions are met: (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (b) the underlying corporate debt is of high credit quality and liquid; (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. deleted 307 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 10 paragraph 1 introductory part 1. A securitisation shall be considered as eligible provided that all of the following conditions are met: 1. A securitisation shall not be considered as eligible. 308 Alain Lamassoure, Alain Cadec Article 10 paragraph 1 point a (new) AM\ doc 45/127 PE v02-00

46 (-a) the Asset Backed Commercial Paper has a legal maturity at issuance or a residual maturity of 397 days or less; 309 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 10 paragraph 1 point a (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; deleted 310 Markus Ferber Article 10 paragraph 1 point a (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (a) it is identified as a simple, transparent and standardised securitisation. Justification The underlying exposure or pool of exposures should not be restricted to corporate debt, because in the EU also instruments that included consumer debt have proven to be stable and should therefore be eligible. Furthermore, the eligibility requirements for securitisations PE v /127 AM\ doc

47 should be established at the level of the securitisation rather than at the level of the underlying. 311 Alain Lamassoure, Alain Cadec Article 10 paragraph 1 point a (a) the underlying exposure or pool of exposures consists exclusively of corporate debt; (a) the underlying exposure or pool of exposures consists exclusively of eligible debt; 312 Markus Ferber Article 10 paragraph 1 point b (b) the underlying corporate debt is of high credit quality and liquid; deleted 313 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 10 paragraph 1 point b (b) the underlying corporate debt is of high credit quality and liquid; deleted AM\ doc 47/127 PE v02-00

48 314 Eva Joly on behalf of the Verts/ALE Group Article 10 paragraph 1 point b (b) the underlying corporate debt is of high credit quality and liquid; (b) the underlying corporate debt is of high credit quality and liquid and the pool of exposure is sufficiently diversified according to the principle of risk spreading and as demonstrated by a low average default correlation; 315 Alain Lamassoure, Alain Cadec Article 10 paragraph 1 point b (b) the underlying corporate debt is of high credit quality and liquid; (b) the eligible debt is of high credit quality and liquid; 316 Fabio De Masi, Marisa Matias, Miguel Viegas, Matt Carthy, Rina Ronja Kari, Paloma López Bermejo Article 10 paragraph 1 point c PE v /127 AM\ doc

49 (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. deleted 317 Alain Lamassoure, Alain Cadec Article 10 paragraph 1 point c (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. (c) the underlying exposure or pool of exposures has a weighted average life (WAL) of 397 days or less. 318 Markus Ferber Article 10 paragraph 1 point c (c) the underlying corporate debt has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. (c) the securitisation has a legal maturity at issuance of 397 days or less; or has a residual maturity of 397 days or less. 319 Peter Simon, Anneliese Dodds AM\ doc 49/127 PE v02-00

50 Article 10 paragraph 1 a (new) 1 a. A securitisation shall also be considered as eligible provided that it qualifies as asset-backed security of high liquidity and credit quality meeting the requirements laid down in Article 13 of the Commission delegated regulation [No.../...] to supplement Regulation (EU) 575/2013 with regard to liquidity coverage requirement for Credit Institutions. Justification MMFs should not be prevented from investing in instruments which are important as a method for financing lending to SMEs and consumers, namely certain consumer credit ABSs. MMFs should be able to invest in categories of underlying assets that have performed well during the crisis and demonstrated a good liquidity and credit track-record. This shall enable MMFs to maintain their role in financing the real economy. 320 Markus Ferber Article 10 paragraph 1 a (new) 1 a. Asset backed commercial papers shall be considered as eligible provided that their respective instruments are liquid and that the underlying debt is of high credit quality. The condition of liquidity is met if the asset backed commercial paper is fully supported (within the meaning of Recital 64 of Regulation (EU) No 575/2013/EU) by a credit institution that fulfils the criteria in Article 11 (c). Asset backed commercial papers shall be PE v /127 AM\ doc