EUROPE: Commission Proposes Amendments to the Delegated Regulation on Investment Requirements under MMF Regulation

Friday June 18 2021

On 15 June 2021, the European Commission adopted a Delegated Regulation amending Delegated Regulation 2018/990 with regard to requirements for assets received by money market funds as part of reverse repurchase agreements.

Regulation (EU) 2017/1131 on money market funds lays down rules on authorisation of money market funds that cover, among other things, eligible assets and their quality. In Article 15(7), it empowers the Commission to specify supplementary quantitative and qualitative liquidity requirements applicable to assets received as part of reverse repurchase agreements.

Accordingly, in order to ensure the high quality of collateral provided under such agreements, Commission Delegated Regulation (EU) 2018/990 requires money market fund managers to apply additional requirements where the counterparty is not regulated under Union law or not covered by an equivalence decision (Article 2).

Delegated Regulation (EU) 2018/990 refers to equivalence decisions in general terms, without cross-reference to specific provisions under sectoral legislation. The European Securities and Markets Authority (ESMA) has asked the Commission, by means of the ‘questions and answers (Q&A) arrangements, to clarify the respective legal bases for the equivalence decisions in question.

Amendments

This act amends Delegated Regulation (EU) 2018/990 pursuant to Article 15(7) of Regulation (EU) 2017/1131.

Article 1

In Article 2(6) of Delegated Regulation (EU) 2018/990, points (a), (b) and (c) are replaced by the following:

‘(a) a credit institution supervised under Directive 2013/36/EU of the European Parliament and of the Council, or a credit institution authorised in a third country in respect of which an equivalence decision has been adopted in accordance with Article 114(7) of Regulation (EU) No 575/2013;

(b) an investment firm supervised under Directive 2014/65/EU of the European Parliament and of the Council, or an investment firm authorised in a third country in respect of which an equivalence decision has been adopted in accordance with Article 47 of Regulation (EU) No 600/2014;

(c) an insurance undertaking supervised under Directive 2009/138/EC of the European Parliament and of the Council, or an insurance undertaking authorised in a third country in respect of which an equivalence decision has been adopted in accordance with Article 260 of that Directive;

Article 2

The Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

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