A PIF is not allowed to include, as part of its name, the term “money market fund” or similar unless it adheres with the MFSA’s supplementary conditions.
These rules are in accordance with ESMA’s guidelines on a common definition of European money market funds which lay down the specific requirements of the MMF’s:
Under these regulations, a MMF is a PIF which invests in money market financial instruments, offering returns in line with money market rates.
These regulations also distinguish between a Short-term MMF and a MMF.
Both short term MMFs and MMFs must comply with general guidelines and also have to comply with specific guidelines relating to their category.
Below is a summary of the applicable investment and borrowing rules.
For full details, visit the Funds-Axis Rules Library.
| SHORT TERM MMF | MMF | |
|---|---|---|
| Main investment objective being to be a MMF | Y | Y |
| Deposits must be with credit institutions | Y | Y |
| Derivatives must only be used in line with money market investment strategy | Y | Y |
| Derivatives which give exposure to foreign exchange may only be used for hedging purposes | Y | Y |
| Investment in non-base currency securities is allowed provided the currency exposure is fully hedged | Y | Y |
| Funds invested into must be other short term money market funds | Y | |
| Funds invested into must be other short term money market funds or other MMF | Y |
Below is a summary of some of the other key features:
| SHORT TERM MMF | MMF | |
|---|---|---|
| Valuation Method | Constant net asset value NAV) or variable NAV | Variable NAV |
| Types of NAV | Marking to market or amortised cost | Marking to market |
| Investor Dealings - daily subscriptions and redemptions* | Y | Y |
| *unless marketed solely as an employee savings scheme | ||