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Review of the geco point of sales system
Review of the geco point of sales system













Such harmonisation would enhance the stability of MMFs as a source of short-term finance for governments and the corporate sector across the Union. It is necessary to provide for the harmonisation of prudential requirements related to MMFs by setting out clear rules that impose direct obligations on MMFs and the managers of MMFs throughout the Union. They are also required to ensure the equal treatment of investors in an MMF and to avoid late redeemers being disadvantaged if redemptions are temporarily suspended or if an MMF is liquidated. Uniform rules on MMFs are furthermore necessary to ensure the smooth operation of the short-term funding market for financial institutions, corporate issuers of short-term debt and governments. Uniform rules on the portfolio of an MMF are also required to ensure that MMFs are able to face substantial and sudden redemption requests by a large group of investors. Uniform rules across the Union are necessary to ensure that MMFs are able to honour redemption requests from investors, especially during stressed market situations. Those rules are intended to make MMFs more resilient and limit contagion channels. In order to preserve the integrity and stability of the internal market, it is necessary to lay down rules regarding the operation of MMFs, in particular on the composition of the portfolio of MMFs. Therefore, an MMF should not receive external support. Depending on the size of the MMF and the extent of the redemption pressure, sponsor support could reach proportions that exceed their readily available reserves. Sponsors are often forced to support their sponsored MMFs that are losing value due to reputational risk and fear that panic could spread into sponsors' other businesses. That in turn could lead to contagion within the short-term funding market and result in direct and major difficulties in the financing of financial institutions, corporations and governments, and thus the economy.Īsset managers, backed by sponsors, can decide to provide discretionary support to maintain the liquidity and the stability of their MMFs. In those circumstances, money market issuers can face severe funding difficulties if the markets for commercial paper and other money market instruments dry up. Large redemption requests could force MMFs to sell some of their investment assets in a declining market, potentially fuelling a liquidity crisis. That situation, which according to the Financial Stability Board (FSB) and the International Organisation of Securities Commissions (IOSCO) can be particularly serious for constant or stable net asset value MMFs, could trigger substantial and sudden redemption requests, potentially triggering broader macroeconomic consequences. When the prices of the assets in which an MMF has invested start to decrease, especially during stressed market situations, the MMF cannot always maintain its promise to redeem immediately and to preserve the principal value of a unit or share issued by the MMF to investors. MMFs, therefore, represent a crucial link bringing together demands and offers of short-term cash.Įvents that occurred during the financial crisis have shed light on several features of MMFs that make them vulnerable when there are difficulties in financial markets in which case MMFs could spread or amplify risks throughout the financial system. MMFs are mainly used by corporations seeking to invest their excess cash for a short time frame. On the demand side, MMFs are short-term cash management tools that provide a high degree of liquidity, diversification and stability of value of the principal invested, combined with a market-based yield. Those entities use their investments in MMFs as an efficient way to spread their credit risk and exposure, rather than relying solely on bank deposits. By providing finance to those entities, MMFs contribute to the financing of the economy of the Union. Money market funds (MMFs) provide short-term finance to financial institutions, corporations and governments. Having regard to the opinion of the European Economic and Social Committee ( 2),Īcting in accordance with the ordinary legislative procedure ( 3), Having regard to the opinion of the European Central Bank ( 1), Having regard to the proposal from the European Commission,Īfter transmission of the draft legislative act to the national parliaments, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof, THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, REGULATION (EU) 2017/1131 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL















Review of the geco point of sales system