HM Government has published the Money Market Funds Regulations 2018, together with an explanatory memorandum.

The regulations, to be found on legislation.gov.uk, give effect to the European Union's Money Market Funds Regulation by amending the Financial Services and Markets Act 2000, as amended on many occasions since its passage in the Blair era. They come into force 21 days after 7th June, the day on which they were made, for the purposes of the exercise by the Financial Conduct Authority of any power to make rules, give directions or give guidance, and on 21st July for all other purposes.

The idea is to allow financial firms to apply for funds to be authorised as money market funds (MMFs) by the FCA, and for the FCA to exercise its regulatory powers in respect of MMFs. Regulation 3, when it comes into effect, will amend the Open-Ended Investment Companies Regulations 2001 to let OEICs become MMFs, or for funds that apply to be authorised as an OEIC to be authorised as an MMF at the same time. The FCA may exercise its powers of intervention in respect of an EEA UCITS (an Undertaking for Collective Investments in Transferable Securities that occurs in the European Economic Area) if it appears to the FCA that the EEA UCITS has contravened, or is likely to contravene, a requirement imposed by the EU's MMF Regulation or any directly applicable regulation or decision made under that regulation.

Regulation 4 alters the Alternative Investment Fund Managers Regulations 2013 Regulation to allow the FCA, in the Government's words, "to direct the manner in which an application may be made for an alternative investment fund to be authorised as a money market fund and the process for intervention by the FCA in respect of such a fund."

Regulation 5 makes minor amendments to the Financial Services and Markets Act 2000 (Qualifying European Union Provisions) Order 2013, allowing the FCA to investigate and level 'enforcement action' against funds directly for breaking the regulations.

Asset management firms will be obliged to pay fees to the FCA for the job of authorising and supervising MMFs. The Government expects these to be trifling.

Regulation 6 says that the Treasury must, from time to time, carry out a review of these arrangements and publish a report of its findings. The first report under this regulation must be published before 21st July 2023; subsequent reports must be published at intervals not exceeding five years.

On a more quirky note, the Economic Secretary to the Treasury has made the following statement in the explanatory memo: “In my view, the provisions of the Money Market Funds Regulations 2018 are compatible with the European Convention on Human Rights.”