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 seven fully 'qualified' money market funds. These money market funds (UCITS sub-funds) were established in 2012 and meet all requirements of MiFID II and MMFR. Each ‘qualified’ money market fund specializes in one currency: EUR, USD, GBP, CHF, DKK, NOK or SEK.
In 2019, all funds were 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, 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.
MOST IMPORTANT FEATURES
- No derivatives/repos;
- No entry and exit costs;
- No minimum investment;
- Only products in base currency;
- WAM (Weighted average maturity) maximum 60 days;
- Maximum duration 397 days;
- 'High quality' products tested by means of required internal credit analysis;
- Benchmark: overnight rate (e.g. EONIA) without discount and minimum; and
- High liquidity.
More information about the funds is described in the prospectus, the Key Investor Information Document (KID) and the fact sheets.
- Fully ‘qualified’ money market funds (UCITS, MiFID II and MMFR regulated);
- Available in 7 different currencies;
- The highest degree of security;
- Experienced and specialized fund manager; and
- Tailor-made solutions possible.