On 19 July 2019, the ESMA issued its final report on the guidelines on the reporting procedure to competent authorities under Article 37 of the Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (“MMF Regulation”). These guidelines apply as of 19 September 2019.
ESMA also published on the same day its updated final report on the guidelines on stress test scenarios in relation to Article 28 of the MMF Regulation.
These guidelines are addressed to competent authorities, MMFs, and MMF managers and aim to ensure the uniform application of Articles 28 and 37 of the MMF Regulation.
GUIDELINES ON REPORTING
Pursuant to Article 37 of the MMF Regulation, the manager of a money market fund (”MMF”) shall report information to its national competent authority (the “NCA”) on at least an annual or a quarterly basis.
An Implementing Regulation set out technical standards (the “ITS”) with regard to the template to be used for such reporting.
The guidelines on the reporting procedure provide complementary guidance on the contents of the fields of such template so that managers of MMF have all necessary information to fill in the reporting template and send it to the NCA.
The guidelines cover on the one hand general principles regarding the reporting and the reporting periods, and on the other hand specifications in relation to each block of fields of the reporting template.
ESMA have confirmed that managers of MMFs will be allowed to report quarterly, even if they are subject to yearly reporting and the first quarterly reports to the NCA are due at the end of Q1 2020.
These guidelines are supplemented by related technical reporting instructions.
GUIDELINES ON STRESS TEST SCENARIOS
The updated guidelines on stress test scenarios establish common reference parameters for the stress test scenarios to be applied by the MMFs.
ESMA introduced new scenarios and factors that need to be considered in the performance of stress tests, which include hypothetical redemption levels, liquidity risks changes, credit risk, changes in the interest rates and exchange rates.
The guidelines contain new requirements on how the stress tests should be calibrated in order to establish common reference parameters of the stress test scenarios within the EU, the results of which need to be reported to the NCA.
In order to ensure that the calibration of the stress test scenarios remains adequate over the years, the guidelines will be updated on an annual basis.
These old guidelines on the stress tests for money market funds are already part of the CSSF Circular 18/696 since 20 July 2018.
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