Steer · Prudential sovereign bias
Money-market-fund reforms favouring government-debt funds
- What it is
- MMF rules impose floating NAVs, liquidity fees or gates on prime funds while exempting funds that hold (almost) only government debt.
- Why it counts
- Cash-like savings migrate from private-paper funds to government MMFs, creating a large captive buyer of Treasury bills.
When it was in force
- United States: 2016 → now, in force
- European Union: 2019 → now, in force; the rule may be older than the cited document
2 examples
United States
2016 → nowIn forceFloating NAV and fees/gates applied to institutional non-government funds; government MMFs (99.5% government securities) were spared.
United States today: index 42.9SEC Money Market Fund Reform; Amendments to Form PF, 79 FR 47736 (14 August 2014), amending Rule 2a-7Primary source
“Government money market fund means a money market fund that invests 99.5 percent or more of its total assets in cash, government securities, and/or repurchase agreements that are collateralized fully.”
European Union
2019 → nowIn forceThe rule may be older than the cited document
Only 'public debt CNAV' funds investing 99.5% in government debt may keep a constant NAV without the LVNAV collar limits.
European Union today: index 44.0Regulation (EU) 2017/1131 on money market funds, Article 2(11)Primary source
“that invests at least 99,5 % of its assets in instruments referred to in Article 17(7), reverse repurchase agreements secured with government debt referred to in Article 17(7) and in cash;”
Examples and their dates reviewed .