The Central Bank issued a statement (jointly with Luxembourg's CSSF) on 11 January regarding the incompatibility of reverse distribution mechanisms, such as share cancellation, with the Money Market Funds Regulation (EU/2017/1131) ("MMFR"). The MMFR applied on 21 July 2018 with a transitional period for existing money market funds ("MMFs") until on 21 January 2019. Accordingly, those pre-existing MMFs should have submitted their applications and supporting documentation for authorisation as MMFR compliant funds to the Central Bank by this date. They were also required to submit details of their arrangements for ceasing the use of share cancellation. The Central Bank must make its authorisation decision by 21 March 2019, which effectively provides an extension to this date to confirm that they have ceased use of reverse distribution mechanisms. In the notice the Central Bank (and CSSF) require relevant funds to:
- provide a copy of the notice to its investors informing them that they are invested in a fund which is the subject of the notice;
- ensure all necessary and appropriate facilities are available for investors or prospective investors to obtain any required information from the fund regarding the subject matter of the notice;
- take such steps which in the opinion of the fund are appropriate to avoid a disorderly sale of fund assets; and
- confirm in writing to the Central Bank (or CSSF as applicable) by no later than 21 March 2019 that all use of share cancellation mechanisms has ceased.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
