7 Financial services: Money Market Funds
Committee's assessment |
Politically important |
Committee's decision | Not cleared from scrutiny; further information requested
|
Document details | (a) Proposal for a Regulation on Money Market Funds; (b) European Central Bank Opinion on the proposal for the Regulation
|
Legal base | (a) Article 114 TFEU, co-decision, QMV; (b)
|
Department | HM Treasury |
Document Numbers | (a) (35298), 13449/13 + ADDs 1-2, COM(13) 615;
(b) (36321), 12713/14,
|
Summary and Committee's conclusions
7.1 We have under scrutiny a proposed Regulation, which would
introduce rules specific to Money Market Funds, and a European
Central Bank Opinion on the proposal. When we considered this
matter in July, we heard that it was expected that the Presidency
would be recommencing consideration of the proposal, following
adoption in April of a first reading text.
7.2 The Government tells us now that in fact neither
the previous, Latvian, nor present, Luxembourg, Presidencies have
done so. It says also that it remains unclear as to whether renegotiation
will restart under the Luxembourg Presidency and, if so, whether
it would be based on the European Parliament text. Nevertheless,
the Government will continue to pursue a text which meets the
UK's priorities.
7.3 We note the Government's interim report and
await an account of further developments in due course. Meanwhile
the documents remain under scrutiny.
Full
details of the documents:
(a) Proposal for a Regulation
on Money Market Funds: (35298), 13449/13 + ADDs 1-2, COM(13) 615;
(b) European Central Bank Opinion of 22.05.2014 on a proposal
for a Regulation on Money Market Funds: (36321), 12713/14 .
Background
7.4 Money Market Funds (MMFs) are open-ended funds
that invest in short-term debt securities such as Treasury bills
and commercial paper. This proposed Regulation would introduce
rules specific to MMFs. It would deal with investment policies,
risk management, valuation rules, constant net asset value funds
and external support. The European Central Bank has published
this Opinion on the proposed Regulation, seeking to influence
negotiation of the text.
7.5 When in October 2013 the predecessor Committee
first considered the proposed Regulation it heard that the Government
had reservations about aspects of the proposal related to capital
buffers, repurchase agreements and eligible securitisations, and
credit rating agencies. When that Committee last considered the
matter, in March 2015, it heard that negotiations on the proposed
Regulation had not progressed under the Latvian Presidency, but
that a European Parliament text likely to be adopted in April
might put pressure on the Presidency to restart discussions. The
Committee was told that, in relation to some details about the
likely European Parliament position, this was consistent with
the European Central Bank Opinion, which the Government welcomed.
7.6 When in July we considered the matter the Government
told us that in April the expected European Parliament position
was indeed adopted, that the Government would be seeking amendment
on two points in that position, and that it seemed likely that
the Presidency would be now recommencing negotiations of the proposed
Regulation. We heard that the two points the Government wished
to be addressed concerned sunset clauses for Low Volatility Net
Asset Value MMFs and restriction to EU debt for Public Debt Constant
Net Asset Value MMFs. We looked forward to hearing about how Council
consideration of the proposed Regulation was developing, particularly
in relation to the reservations it had expressed to the predecessor
Committee and to us. Meanwhile the documents remained under scrutiny.
The Minister's letter of 10 September 2015
7.7 The Economic Secretary to the Treasury (Harriett
Baldwin) tells us now that despite the European Parliament's agreement,
there has been little progress in Council consideration of the
proposal. She says that:
· there
were no working groups held under the Latvian Presidency and as
yet there have been no working groups under the Luxembourg Presidency;
· it remains
unclear if and when negotiations will restart under the Luxembourg
Presidency;
· it also
remains unclear whether, and to what extent, proposals put forward
by the Presidency will be based on the European Parliament text;
and
· the
Government will continue to work closely with the Luxembourg Presidency
and other Member States to try to ensure the final compromise
agreed in trilogue negotiations between the Council and European
Parliament is consistent with its priorities of minimising systemic
risk, while ensuring that amendments to the Constant Net Asset
Value MMF landscape are workable for industry and investors.
Previous Committee Reports
Thirty-seventh Report HC 219-xxxvi (2014-15), chapter
1 (18 March 2015), Fifteenth Report HC 219-xv (2014-15), chapter
9 (22 October 2014), Nineteenth Report HC 83-xviii (2013-14),
chapter 12 (23 October 2013) and First Report HC 342-i (2015-16),
chapter 31 (21 July 2015).
|