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Money market funds’ regulation has improved — IOSCO

By on September 9, 2015

A peer review of the regulation of money market funds showed that progress had been made in ensuring proper regulation of such funds, the International Organisation of Securities Commissions has said.

IOSCO said this in a statement announcing the publication of the final report on the ‘Peer review of regulation of money market funds’.

According to the organisation, the report describes the implementation progress made by 31 jurisdictions in adopting legislation, regulation and other policies in relation to money market funds.

IOSCO explained that the review covered the implementation progress for the eight reform areas covered in IOSCO´s 2012 report on ‘Policy recommendations for money market funds’, adding, however, that it did not assess the consistency of implementation measures against the 2012 the IOSCO Report’s recommendations.

The reform areas, according the statement include definition of MMFs in regulation and appropriate inclusion of other investment products presenting features and investment objectives similar to MMFs; limitations to the types of assets of, and risks taken by, MMFs; valuation practices of MMFs; and liquidity management for MMFs.

Others are: addressing the risks and issues which may affect the stability of MMFs that offer a stable NAV; use of ratings by the MMF industry; disclosure to investors; and MMF practices in relation to repurchase agreement transactions.

“Overall, the review found that as of March 31, 2015 – the reporting date – participating jurisdictions had made progress in introducing implementation measures across the eight reform areas,” the statement said.

It, however, found that implementation progress varied between jurisdictions and between reform areas.

It added, “Using the most current data available at the reporting date, the global MMF market was dominated by five jurisdictions (the United States, France, Luxembourg, Ireland and China), which together accounted for almost 90 per cent of global assets under management in MMFs.

“For these jurisdictions, only the US reported having final implementation measures in all Reform Areas. China and the EU members were still in the process of developing and finalising relevant reforms.”

IOSCO explained that for jurisdictions with smaller MMF markets, implementation progress was less advanced: only four other participating jurisdictions (Brazil, India, Italy and Thailand) reported having final implementation measures in all reform areas.

The report, according to the statement, responds to a request from the G20 Leaders in September 2013 for IOSCO to conduct a peer review on progress regarding MMF regulatory reforms.

 

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