The laws and regulations surrounding asset segregation have become increasingly strict and complex in recent years. The revision of the European “Markets in Financial Instruments Directive” introduced in 2007, also known as MiFID II in 2018, is a good example. Investor giros affiliated with investment firms must held uninvested liquidity (cash) of retail clients in ‘qualified’ money market funds. New regulations were also introduced for money market fund managers in 2018; the Money Market Fund Regulation (MMFR). An ‘qualified’ money market fund meets certain MiFID II conditions and the MMFR at the same time.
However, in March 2021, the Autoriteit Financiële Markten (AFM) stated that several investment firms had incorrectly assumed that client cash were held in a 'qualified' money market fund. How is that possible?
FundShare Fund Management (FundShare) offers the solution.
“Investment firms that use a money market fund for the custody of client cash are wrong in assuming that it is a 'qualified money market fund'. Insufficient attention is paid by investment firms to the distinction between the definition of 'approved money market fund' in the BGfo and the qualification of a money market fund in Regulation (EU) 2017/1131 ("MMFR")"
AFM – Feedback letter Assurance Rapportage 2019 (16 march 2021)
OUR SOLUTION: FUNDSHARE’S QUALIFIED MONEY MARKET FUNDS
FundShare manages a 'qualified' money market fund. The money market fund (UCITS sub-fund) is established in 2012 and meet all requirements of MiFID II and MMFR. The‘qualified’ money market fund specializes in one currency, EUR, but we've experience with other currencies: USD, GBP, CHF, DKK, NOK or SEK.
In 2019, the fund is approved by the AFM as 'qualified' money market funds. The combination of the different currencies, distribution options and UCITS, MiFID II and MMFR regulation make our money market funds an unique solution.
For this reason, DeGiro (acquired by flatex), the largest broker in Europe, previously has been using FundShare’s money market funds since its origin. Hundreds of millions in cash from European retail investors are placed in FundShare's ‘qualified’ money market funds. Since they have the banking license from Flatex they have an alternative. Knox had the same challenges and is using the FundShare EUR Cash Fund from the start.