The current definition of its Money Market sector is funds that invest at least 95% of their assets in money market instruments (i.e. cash and near cash, such as bank deposits, certificates of deposit, very short-term fixed-interest securities or floating rate notes).
The changes took effect on 1 July this year, in line with the Financial Services Authority’s publications of the definitions. The IMA is still consulting with its member firms about what the new definition will be so are still to finalise any change.
While the consultation is ongoing, firms have until 1 January next year to transition their funds into the newly-defined sector at which point funds within the IMA sector will be monitored according to the new FSA and ESMA, the Committee of European Securities Regulators, rules.
According to the committee’s ‘Guidelines on a common definition of European money market funds’, the ESMA approach is to distinguish between short-term money market funds – which operate a very short weighted average maturity and weighted average life – and money market funds that operate with a longer weighted average maturity and weighted average life.