EI - Money Market Funds and Share Cancellation Mechanism
The Central Bank of Ireland and the Luxembourg regulator (CSSF) issued a joint statement conveying their respective supervisory approaches in relation to share cancellation and the implementation of the Money Market Fund Regulation (“MMFR”).
The joint statement follows recent confirmation from the EU that the practice of cancelling shares under a reverse distribution mechanism is not compatible with the MMFR.
Under the MMFR all money market funds (“MMFs”) existing prior to 21 July 2018 must submit an application for authorization to the relevant regulator by 21 January 2019 with all documents and evidence necessary to demonstrate compliance with the MMFR. This includes details of arrangements for the cessation of the use of the share cancellation mechanism. The Regulators must then assess whether or not each fund is compliant with the MMFR by 21 March 2019.