CSSF Issued Its First FAQ On MMFs

On 28 August 2018, the CSSF issued its first version of Frequently Asked Questions (FAQs) concerning the Regulation (EU) 2017/1131 on Money Market Funds (MMFs). The FAQs aim at highlighting some of the key aspects of the MMF Regulation ("MMFR" or "Regulation") on MMFs and are addressed to managers of MMFs and MMFs that are established in Luxembourg.

This first FAQs cover general provisions, obligations concerning the investment policies of MMFs, obligations concerning the risk management of MMFs, valuation rules and transparency requirements.

Under general provisions, a few questions have been addressed with regard to the impact of distribution policy on the type of MMFs, the applicability of circular CSSF 08/356 to those MMFs authorised under the MMFR, assessment of the CSSF on the materiality of the changes at the level of existing funds pursuant to the entry into force of the MMFR, eligible entity to manage the MMFs and the applicability of the MMFR to a Luxembourg AIF MMF marketed exclusively outside of Luxembourg.

In terms of obligations concerning the investment policies of MMFs, a few topics have been covered, namely the types of Master/Feeder structures allowed, clarification on the application of the 10% investment limit in deposits and on the basis of computation of the investment limits when referring to single body or total assets (i.e. as well as the obligation for the MMFs to detail the internal credit quality assessment...