By Phoebe Seers and David Milliken<\/p>\n
LONDON, May 14 (Reuters) – Britain will impose tougher rules later this year on money market funds, which have \u200cbeen a focus of regulators since market turmoil in March 2020, \u200cwhen they were hit by heavy redemptions during a COVID-19-induced “dash for cash”.<\/p>\n
Legislation will establish a new \u200bregulatory framework with the expectation that the 300 billion pound ($405 billion) sterling money market fund sector will hold more liquid assets, the government said in a statement on Thursday.<\/p>\n
“These reforms mark an important step forward in enhancing the resilience of \u200cthe wider non-bank financial \u2060sector,” it said.<\/p>\n
Britain’s financial regulator consulted on reforms in 2023 that aimed to make it easier for funds to sell \u2060assets in periods of stress, following a recommendation from the Bank of England that the sector needed to be more resilient.<\/p>\n
In its latest Financial Stability Report, the \u200bBoE said \u200bmoney market funds are vulnerable in periods \u200bof stress because investors can \u200cwithdraw cash faster than some of the funds\u2019 less liquid assets can be sold, leaving them exposed to sudden waves of redemptions.<\/p>\n
It warned this could trigger runs that amplify market shocks, and ultimately tighten financial conditions for the wider economy.<\/p>\n
The government on Thursday said that the Financial Conduct Authority would issue \u200ca statement shortly with further details of the \u200bplans, which are subject to parliamentary approval \u200band aim to take into \u200baccount the cross-border nature of the sector.<\/p>\n
The European Commission on \u200cMonday published new guidance for money market \u200bfunds, setting out \u200bhow liquidity buffers should be used to meet redemption requests during times of market stress.<\/p>\n
Britain’s government also said it intends to extend a temporary \u200bpermission that allows EU funds \u200cto market to British investors, which was due to expire at \u200bthe end of this year.<\/p>\n
($1 = 0.7399 pounds)<\/p>\n
(Reporting by Phoebe Seers \u200band David Milliken; Editing by Kirsten Donovan)<\/p>\n","protected":false},"excerpt":{"rendered":"By Phoebe Seers and David Milliken LONDON, May 14 (Reuters) – Britain will impose tougher rules later this…\n","protected":false},"author":2,"featured_media":36248,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[2],"tags":[13,16974,16973,16975,16972],"class_list":["post-36247","post","type-post","status-publish","format-standard","has-post-thumbnail","category-britain","tag-britain","tag-liquid-assets","tag-market-turmoil","tag-money-market","tag-money-market-funds"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116573059459641824","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/36247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=36247"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/36247\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/36248"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=36247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=36247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=36247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}