The U.K.-based Investment Week published the article, "ESMA prepares stance on money market fund regulation." They tell us, "The European Securities and Markets Authority (ESMA) is preparing to issue its opinion on the future of Europe-wide money market fund regulation to the European Commission (EC). Speaking at the Irish Funds 5th Annual UK Symposium in London on Friday (10 November), Richard Stobo, head of investment management at the pan-European regulator said it was readying its recommendations to the EC, which would be based on an industry consultation held over the past year." (See our Aug. 24 News, "IMMFA, Irish Funds Comment on ESMA's EU Reforms Consultation Paper, our May 30 News, "ESMA Publishes Consultation on European MMF Regs; Fitch on European" for more.)
Investment Week writes, "Stobo said it would help form the EC's work to produce EU-wide legislation for money market funds, which are currently regulated at country level. ESMA's opinion had taken into account market responses to its May 2017 consultation paper on the products and aimed to bring about "sensible" regulatory convergence in the EU, he said." He comments, "It is now up to the EC to decide whether they want to take our opinion on board."
The piece explains, "ESMA's priority is ensuring the stability and integrity of money market funds, with key proposals including liquidity and credit quality requirements. Once the EC has reviewed the position of the watchdog it will create new rules, which will replace those of national regulators, such as the UK's Financial Conduct Authority (FCA)."
Finally, the publication adds, "Stobo also said work was being undertaken on publishing a Europe-wide report similar to the FCA's Asset Management Market Study, designed to improve price competition in the industry. He said ESMA's own study would approach the issue of price competition "slightly differently" to the FCA's approach, but he did not provide further details. Stobo added the regulator's research would 'begin with UCITS funds'."
In related news, Crane Data's MFI International shows assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Ireland or Luxemburg and denominated in USD, Euro and GBP (sterling), up $101 billion year-to-date to $833 billion as of 11/13/17. U.S. Dollar (USD) funds (152) account for over half ($443 billion, or 53.2%) of the total, while Euro (EUR) money funds (93) total E96 billion and Pound Sterling (GBP) funds (106) total L209. USD funds are up $45 billion, YTD, while Euro funds are up E1 billion and GBP funds are up L19B. USD MMFs yield 1.01% (7-Day) on average (11/13/17), up 85 basis points from 12/31/16. EUR MMFs yield -0.52% on average, down 33 basis points YTD, while GBP MMFs yield 0.22%, down 6 bps YTD.
Crane's latest MFI International Money Fund Portfolio Holdings data (as of 10/31/17) shows that European-domiciled US Dollar MMFs, on average, consist of 17% in Treasury securities, 25% in Commercial Paper (CP), 21% in Certificates of Deposit (CDs), 19% in Other securities (primarily Time Deposits), 15% in Repurchase Agreements (Repo), and 3% in Government Agency securities. USD funds have on average 29.6% of their portfolios maturing Overnight, 13.5% maturing in 2-7 Days, 21.1% maturing in 8-30 Days, 11.3% maturing in 31-60 Days, 9.4% maturing in 61-90 Days, 11.6% maturing in 91-180 Days, and 3.1% maturing beyond 181 Days. USD holdings are affiliated with the following countries: US (25.9%), France (16.6%), Japan (9.9%), Canada (8.0%), Sweden (6.8%), The Netherlands (5.7%), Australia (5.4%), Germany (4.9%), United Kingdom (3.9%), Singapore (2.8%), Belgium (2.8%), and China (2.3%).
The 20 Largest Issuers to "offshore" USD money funds include: the US Treasury with $83.2 billion (16.6% of total assets), BNP Paribas with $22.1B (4.4%), Societe Generale with $16.8B (3.4%), Credit Agricole with $14.5B (2.9%), Mitsubishi UFJ Financial Group Inc with $12.7B (2.5%), Toronto-Dominion Bank with $12.2B (2.4%), Natixis with $9.8B (2.0%), ING Bank with $9.0B (1.8%), Svenska Handelsbanken with $8.6B (1.7%), Wells Fargo with $8.6B (1.7%), Mizuho Corporate Bank Ltd with $8.4B (1.7%), Swedbank AB with $8.4B (1.7%), Sumitomo Mitsui Trust Bank with $8.1B (1.6%), RBC with $7.7B (1.5%), National Australia Bank Ltd with $7.6B (1.5), Nordea Bank with $7.6B (1.5%), DnB NOR Bank ASA with $7.3B (1.5%), Skandinaviska Enskilda Banken AB with $7.2B (1.4%), Rabobank with $7.1B (1.4%), and Commonwealth Bank of Australia with $6.8B (1.3%).
Euro MMFs tracked by Crane Data contain, on average 43% in CP, 25% in CDs, 21% in Other (primarily Time Deposits), 9% in Repo, 1% in Treasuries and 1% in Agency securities. EUR funds have on average 22.0% of their portfolios maturing Overnight, 10.5% maturing in 2-7 Days, 16.6% maturing in 8-30 Days, 12.8% maturing in 31-60 Days, 15.2% maturing in 61-90 Days, 19.4% maturing in 91-180 Days and 3.5% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (29.5%), Japan (14.1%), US (12.2%), Sweden (7.8%), The Netherlands (7.8%), Belgium (6.9%), Switzerland (5.3%), Germany (4.4%), and the United Kingdom (2.5%).
The 15 Largest Issuers to "offshore" EUR money funds include: BNP Paribas with E5.8B (6.2%), Credit Agricole with E4.0B (4.3%), Rabobank with E3.7B (3.9%), Svenska Handelsbanken with E3.6B (3.8%), KBC Group NV with E3.4B (3.6%), Nordea Bank with E3.4B (3.6%), Credit Mutuel with E3.1B (3.3%), Societe Generale with E3.0B (3.2%), Mizuho Corporate Bank Ltd with E2.9B (3.1%), Mitsubishi UFJ Financial Group Inc with E2.9B (3.1%), Sumitomo Mitsui Banking Co with E2.9B (3.1%), BPCE SA with E2.6B (2.8%), Agence Central de Organismes de Securite Sociale with E2.6B (2.8%), Dexia Group with E2.5B (2.7%), and UBS AG with E2.5B (2.6%).
The GBP funds tracked by MFI International contain, on average (as of 10/31/17): 42% in CDs, 23% in Other (Time Deposits), 21% in CP, 11% in Repo, 3% in Treasury, and 0% in Agency. Sterling funds have on average 26.3% of their portfolios maturing Overnight, 12.3% maturing in 2-7 Days, 19.4% maturing in 8-30 Days, 10.8% maturing in 31-60 Days, 13.3% maturing in 61-90 Days, 14.7% maturing in 91-180 Days, and 3.2% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: Japan (19.2%), France (19.0%), United Kingdom (13.8%), The Netherlands (8.0%), Germany (6.5%), US (5.3%), Canada (5.0%), Sweden (4.9%), Australia (3.0%), and China (2.9%).
The 15 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L10.5B (6.4%), Sumitomo Mitsui Banking Co. with L7.9B (4.9%), Mitsubishi UFJ Financial Group Inc. with L7.5B (4.6%), BPCE SA with L6.7B (4.1%), Credit Agricole with L6.5B (4.0%), BNP Paribas with L6.2B (3.8%), Mizuho Corporate Bank Ltd with L6.2B (3.8%), Rabobank with L5.9B (3.6%), Sumitomo Mitsui Trust Bank with L5.0B (3.1%), Bank of America with L4.9B (3.0%), Credit Mutuel with L4.9B (3.0%), Nordea Bank with L4.6B (2.8%), ING Bank with L4.6B (2.8%), DZ Bank AG with L3.8B (2.3%), Toronto Dominion Bank with L3.5B (2.2%).
