Key facts
- The UK's Financial Conduct Authority (FCA) has updated its proposals for money market fund liquidity requirements.
- Stable net asset value (NAV) funds will be expected to hold 40% of assets in weekly liquid assets (WLA).
- Variable NAV funds will be expected to hold 20% WLA.
- These levels are a softening from original proposals which had suggested a binding requirement of 50% WLA.
- The updated proposals aim to increase resilience while ensuring funds can meet investor needs.
Britain's financial regulator, the Financial Conduct Authority (FCA), has slightly softened its proposed rules for money market funds regarding the holding of liquid assets. The updated proposals follow consultation responses and aim to ensure funds are resilient enough to withstand financial shocks.
Under the revised guidance, 'stable net asset value' (NAV) funds will have a "strong supervisory expectation" to hold 40% of their assets in weekly liquid assets (WLA). For 'variable NAV' funds, the expectation will be 20% WLA. These levels are lower than the FCA's original proposals, which had suggested a binding requirement for firms to hold 50% of their assets in investments convertible to cash within a week.