Luxembourg's financial regulator, the CSSF, has issued a reminder that Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (MMFR) will enter into force and apply from tomorrow, 21 July 2018.
Scope of the Money Market Fund Regulation
The regulation applies, in accordance with Article 1(1), to collective investment undertakings established, managed or marketed in the Union that: (a) require authorisation as UCITS or are authorised as UCITS under Directive 2009/65/EC or are AIFs under Directive 2011/61/EU; (b) invest in short-term assets; and (c) have distinct or cumulative objectives offering returns in line with money market rates or preserving the value of the investment.
Article 6(1) of the MMFR further specifies that “A UCITS or an AIF shall not have characteristics which are substantially similar to those referred to in Article 1(1), unless it has been authorised as an MMF in accordance with this Regulation.” On that basis collective investment undertakings that fulfil the aforementioned criteria will be in the scope of the MMFR and will have to be authorised as an MMF meeting all the related requirements. The scope as defined by the MMFR involves that collective investment undertakings other than those currently subject to the CESR’s Guidelines on a Common Definition of European Money Market Funds (CESR/10-049), as amended by the ESMA Opinion of 22 August 2014 (ESMA/2014/1103), can qualify as MMFs in accordance with the MMFR. It will be the responsibility of the collective investment undertakings to assess whether they will enter the scope of the MMFR.
Authorisation of MMFs under the MMFR
Luxembourg domiciled UCITS and AIFs as well as non-EU AIFs for which the CSSF will be the competent authority in accordance with the MMFR that will be in the scope of the MMFR will have to be authorised by the CSSF as an MMF in accordance with Articles 4 (UCITS and AIFs) and 5 (AIFs): for that purpose a dedicated form is available on the CSSF website at www.cssf.lu/fileadmin/files/Metier_OPC/Formulaires/Demande_agrement_pour_fonds_monetaire.xls
As of 21 July 2018, new UCITS and AIFs falling in the scope of the MMFR will have to be authorised as an MMF complying with all the requirements of the regulation. UCITS and AIF that exist before 21 July 2018 benefit however from a 6-month transitional period to comply with the regulation. They will have to submit an application to the CSSF until 21 January 2019 at the latest.
Also, in accordance with Article 5 of the MMFR, AIFs can only be authorised as an MMF if the competent authority of the MMF approves the application submitted by an AIFM that has already been authorised under Directive 2011/61/EU to manage an MMF that is an AIF. On that basis Luxembourg domiciled AIFMs will have to get authorised by the CSSF before being able to manage MMFs that are an AIF.