The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

ESMA Provides FAQ on Common Definitions for European Money Market Funds Under UCITS

As part of the revised Undertakings for Collective Investment in Transferable Securities (UCITS) Directive in Europe, the European Securities and Markets Authority (ESMA) has published a Q&A document that details its guidelines for regulators regarding common definitions for the supervision of money market funds. The paper is aimed at getting European regulators in synch with regards to the treatment of these instruments across the region and to this end, includes information about the expected treatment of ratings (internal and external), details of semantics related to these funds and ESMA’s expectations for firms’ treatment of these instruments.

As stated by ESMA in the document: “The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices under Article 29(2) of the ESMA Regulation.” As such, it is a living document and any further questions or requests for clarification can be added by emailing moneymarketfunds@esma.europa.eu.

The Q&A currently highlights items such as ESMA’s expectations in terms of a management company’s internal rating process; the treatment of instruments with only long term ratings and those that have not been rated; and the definition of what constitutes a “recognised credit rating agency,” among other things. It also provides technical details with regards to the calculation of various aspects of money market funds’ structures, such as the weighted average maturity of the fund or its weighted average life.

ESMA has spent a large part of this year delving into the data related details of various pieces of legislation and, with regards to UCITS, it is an extension of the work carried out by its predecessor last year. The European level regulator has also spent a considerable amount of time, along with the rest of the global regulatory community, consulting on the subject of credit ratings agency as part of the crackdown on the sector.

Related content

WEBINAR

Recorded Webinar: Developing operational resilience

Financial institutions’ operational resilience – essentially the ability to prevent, adapt and respond to, and recover and learn from operational disruptions – has come under extreme pressure during the coronavirus pandemic, with last year’s March lockdown creating unprecedented circumstances for financial firms. Employees working from home raised the stakes, as they still do, adding to...

BLOG

Brexit is Here – But Sadly, Equivalence is Not

The UK has finally left the European Union. A trade deal was wrung out at the eleventh hour, allowing the two sides to trade with zero tariffs and quotas, but the financial services industry has been left hanging – with talk of an MoU around the regulation of financial services being reached only by March...

EVENT

TradingTech Summit Virtual

TradingTech Summit (TTS) Virtual will look at how trading technology operations can capitalise on recent disruption and leverage technology to find efficiencies in the new normal environment. The crisis has highlighted that the future is digital and cloud based, and the ability to innovate faster and at scale has become critical. As we move into recovery and ‘business as usual’, what changes and technology innovations should the industry adopt to simplify operations and to support speed, agility and flexibility in trading operations.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...