Statement on the treatment of share cancellation under EU Regulation 2017/1131

Joint statement of the Central Bank of Ireland and the Commission de Surveillance du Secteur Financier, Luxembourg on the treatment of share cancellation under the Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds

The Central Bank of Ireland (“Central Bank”) and the Commission de Surveillance du Secteur Financier (“CSSF”) are issuing this joint statement in the interests of supporting the orderly implementation of the Money Market Funds Regulation (MMF Regulation) by converging their respective supervisory approaches to share cancellation and advising the market accordingly.

Article 44 of the MMF Regulation provides that money market funds existing prior to 21 July 2018 shall submit an application for authorisation to its competent authority by 21 January 2019 together with all documents and evidence necessary to demonstrate compliance with the MMF Regulation. This application should include details of arrangements for the cessation of the use of the share cancellation mechanism in accordance with the MMF Regulation and the opinion of the European Commission expressed in its letters dated January 2018 and October 2018 that share cancellation is not compatible with the MMF Regulation. 

Article 44 of the MMF Regulation also provides that no later than 21 March 2019 (being the date falling 2 months after 21 January 2019), the Central Bank or CSSF (as applicable) shall assess whether or not each fund is compliant with the MMF Regulation and shall issue a decision and notify it immediately to the fund.

With that in mind, and without prejudice to the functions and powers of the Central Bank and CSSF respectively, with effect from 21 January 2019, the Central Bank and the CSSF will as part of their supervisory strategy for the enforcement of the MMF Regulation, require relevant funds to:

• provide a copy of this notice to investors and notify such investors that they are invested in a fund which is the subject of this notice;
• ensure all necessary and appropriate facilities are available for investors or prospective investors to get such information as they may require from the fund with respect to the subject matter of this notice;
• take such steps which in the opinion of the fund are appropriate to avoid a disorderly sale of fund assets; and
• confirm to the Central Bank or CSSF (as applicable) in writing by no later than 21 March 2019 that all use of share cancellation mechanisms has ceased.