EFAMA has published its response to the UK FCA’s consultation paper (CP23/28) on updating its regime for Money Market Funds (MMFs). While fundamentally agreeing on the need to definitely remove the existing link between liquidity breaches and the potential activation of LMTs for stable NAV MMFs, we express significant reservations with the proposed enhancements to the existing liquidity ratios across all types of MMF structures. 

Moreover, regarding the proposal to align liquidity thresholds between LVNAV and VNAV funds, we firmly believe this is not justified, especially considering the critical differences between LVNAV and VNAV MMF types. Here, we recommend that UK authorities do not depart from the relevant provisions of the EU MMFR regime in a move that could otherwise jeopardise a future equivalence recognition between the UK and the EU MMF regulatory regimes.