COLL & Qualifying Money Market Funds
Amendments are proposed to the Handbook including the Collective Investment Schemes sourcebook (COLL). The changes arise both from guidelines issued by, as it was then, CESR and consequential amendments under UCITS IV.
In 2008 some UCITS schemes around Europe encountered liquidity issues following investment in money market funds arising from a lack of a harmonised definition of the latter. In addition to the existing ‘qualifying money market funds'(QMMF), COLL will introduce (COLL 5.9) the concept of ‘short-term money market funds’ (STMMF) and ‘money market funds’ (MMF) and will prohibit the use of the term ‘money market’ for any fund that does not meet the guidelines.
The FSA estimate that around 40 current schemes/sub-funds will be affected as a result.
The link will take you to the relevant rule amendments – see Appendix 9, Annex H. One amendment worth noting is that COLL 5.2.8(4) – the ability of a UCITS scheme to hold up to 10% of the scheme property in ineligible assets – will not apply to a QMMF/STMMF/MMF and nor will the 20% rule re non-UCITS retail schemes in COLL 5.6.5R(2).
The changes will be applicable from 1 July 2011.