On July 11, 2018, the U.K. Financial Conduct Authority published a Policy Statement outlining the rule changes necessary to align its rulebook with the provisions of the EU MMF Regulation.
The FCA has made changes to amend, delete or disapply rules in its Handbook to MMFs to ensure those rules do not conflict with the MMF Regulation. The regulator consulted on the proposed changes between January and March 2018. The amended rules apply from July 21, 2018 to new MMFs, including funds with substantially similar objectives to MMFs, once they are authorized as MMFs under the MMF Regulation. Funds already operating as either MMFs or funds falling within the current definition of short-term money market funds in the FCA's rules will benefit from transitional provisions and will have until July 21, 2019 to apply for authorization under the MMF Regulation.
The MMF Regulation takes effect directly across the EU from July 21, 2018. The effect of the MMF Regulation in the U.K. will be that authorized unit trusts, authorized contractual schemes, open-ended investment companies and alternative investment funds can all apply to be authorized as MMFs. As a directly applicable EU regulation, the MMF Regulation does not require transposition into national law. However, these changes have been made to ensure the U.K. rules are in line with EU laws and empower the FCA to authorize funds as MMFs, to levy fees and to enforce requirements under the MMF Regulation.
The Policy Statement (FCA PS 18/17) is available at: https://www.fca.org.uk/publication/policy/ps18-17.pdf, details of the FCA consultation on proposed Handbook changes are available at: https://finreg.shearman.com/uk-financial-conduct-authority-proposes-handbook- and details of the U.K. implementing regulations for the MMF Regulation are available at: https://finreg.shearman.com/ukimplementing- regulations-for-the-money-market-.
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