The Money Market Funds Regulation: Regulation (EU) 2017/1131
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The MMF Regulation is a product rulebook on top of UCITS and AIFMD. A UCITS or AIF established, managed or marketed in the EU needs MMF authorisation if it invests in short-term assets for money market returns or capital preservation (Art. 1, Art. 4). It must take one of three types (Art. 3). It has applied since 21 July 2018, and member states may not add requirements in the field it covers.
Scope and the core mechanism
Scope turns on activity. Article 1(1) catches any UCITS or AIF that invests in short-term assets and seeks money market returns or to preserve the value of the investment. Article 1(2) bars member states from adding requirements in the field the regulation covers. Under Article 4, no such fund may be set up, marketed or managed in the EU without MMF authorisation, which is valid in every member state. A new UCITS is authorised as an MMF within its UCITS authorisation, while an existing UCITS applies separately under Article 4(4) and (5). An AIF follows Article 5.
Article 3 sets three types, and the authorisation must name one. Each is also either a short-term MMF or a standard MMF, but a standard MMF can only be a VNAV fund (Art. 25(3)).
| Type | Dealing price | Short-term daily and weekly liquidity minimums |
|---|---|---|
| Public debt CNAV. | Constant NAV. At least 99.5% in public debt, reverse repos backed by it, and cash (Art. 2(11)). | 10% daily and 30% weekly. |
| LVNAV. | Constant NAV, but only while it stays within 20 basis points of the NAV calculated under Article 30 (Art. 33(2)(b)). | 10% daily and 30% weekly. |
| VNAV. | NAV per unit under Art. 30, valued mark-to-market or, where that is not possible, conservatively mark-to-model (Art. 29). | 7.5% daily and 15% weekly. |
The minimums come from Article 24. The daily and weekly buckets count maturing assets, plus reverse repos and cash that can be recalled on one or five working days' notice. The weekly bucket may also include, within limits, qualifying public debt for CNAV and LVNAV funds (up to 17.5%). For VNAV funds it may include money market instruments or MMF units (up to 7.5%). A short-term MMF has a weighted average maturity (WAM) of no more than 60 days and a weighted average life (WAL) of no more than 120 days. A standard MMF has a WAM not exceeding six months, a WAL not exceeding 12 months and the VNAV minimums (Art. 25).
In practice: once an LVNAV fund's constant NAV deviates by more than 20 basis points, the next subscription or redemption deals at the NAV calculated under Article 30 (Art. 33(2)). Investors must be warned in writing, before they sign, of when the fund stops dealing at a constant price.
Key provisions
| Provision | What it says | The practical point |
|---|---|---|
| Eligible assets (Art. 9) | Only money market instruments, eligible securitisations and ABCPs, bank deposits, derivatives, repos, reverse repos and units of other MMFs. | No short sales, no equity or commodity exposure, no securities lending or borrowing, and no borrowing or lending of cash. |
| Diversification (Art. 17) | The general limits are 5% in instruments of one issuer and 10% in deposits with one bank. Securitisations and ABCPs are capped at 20% in total, with at most 15% that is not STS. | Exceptions include a 10% issuer limit within a 40% aggregate for VNAV funds and higher covered-bond limits. Article 17(7) allows up to 100% in instruments of the public issuers it names, with at least six issues and at most 30% in one. The issuers are named in the fund rules and prospectus. |
| Counterparty limits (Art. 17(4) and (5)) | Aggregate counterparty risk exposure to one counterparty from uncleared derivatives is capped at 5% of assets. Cash lent to one counterparty in uncleared reverse repos is capped at 15%. | Since Regulation 2024/2987, trades cleared through an authorised or recognised CCP are treated apart. For a cleared reverse repo, the cash in each agreement is capped at 15%. |
| Credit assessment (Arts. 19 and 20) | The manager runs a prudent internal credit quality assessment. Assessments and methods are reviewed at least yearly, and the method review goes to the regulator. | Level 2 sets the validation and back-testing criteria. A revised method counts as a material change unless the manager shows it is not (Delegated Regulation 2018/990, Art. 8). |
| Fees and gates (Art. 34) | For CNAV and LVNAV funds, weekly assets below 30% plus net redemptions above 10% in a day trigger a board review. Below 10% weekly assets, the board must apply a fee or a suspension. | Suspensions totalling more than 15 days in 90 days end the fund's CNAV or LVNAV status. Each investor is told in writing. |
| External support (Art. 35) | An MMF may not receive direct or indirect third-party support, including from a sponsor. The ban covers support intended to, or that would in effect, guarantee liquidity or stabilise the NAV. | The ban covers cash injections, buying assets at inflated prices, buying units for liquidity, and letters of support. |
| Stress testing (Art. 28) | Regular tests across liquidity, credit, rates and FX, redemptions, spreads and macro shocks. The board sets the frequency, which must be "at least bi-annual". | A test showing a weakness triggers a report and action plan for the board and the regulator. |
| Investor transparency (Art. 36) | At least weekly: maturity breakdown, credit profile, WAM and WAL, the ten largest holdings, total assets and net yield. | Marketing material must say the MMF is not guaranteed and differs from a deposit, as the principal can fluctuate. It must also say the fund does not rely on external support and the investor bears the risk of loss. |
| Reporting (Art. 37) | The manager reports to the fund's regulator at least quarterly. A fund with assets of €100 million or less reports at least yearly. | LVNAV funds also report each breach of the 10 and 20 basis-point thresholds. Regulators pass the data to ESMA within 30 days of quarter end. |
Amendment history
| Date | Instrument | What changed |
|---|---|---|
| 14 Jun 2017 | Regulation (EU) 2017/1131 | The original regulation, applying from 21 July 2018 (Art. 47). Existing money market funds had to apply for authorisation by 21 January 2019 (Art. 44). |
| 10 Apr 2018 | Delegated Regulation (EU) 2018/990 | Tied Article 11(1)(c) to the STS rules from 1 January 2019. Set reverse repo haircuts and credit assessment criteria from 21 July 2018. |
| 17 Apr 2018 | Implementing Regulation (EU) 2018/708 | The reporting template for Article 37, applying from 21 July 2018. |
| 15 Jun 2021 | Delegated Regulation (EU) 2021/1383 | Replaced Article 2(6)(a) to (c) of 2018/990. These list reverse repo counterparties exempt from the haircut rules, now including equivalent third-country firms. |
| 13 Dec 2023 | Regulation (EU) 2023/2869 | Added Article 37a: register data goes on the European single access point from 10 January 2030. |
| 27 Nov 2024 | Regulation (EU) 2024/2987 | Split the repo and counterparty limits in Articles 14 and 17 between centrally cleared and uncleared trades. Published 4 December 2024; the consolidated text of 24 December 2024 incorporates the changes. |
| 26 May 2025 | Corrigendum to Regulation (EU) 2024/2987 | Corrected Article 17(5). For a cleared reverse repo, the 15% limit applies to the cash in each agreement (see the consolidated text). |
What it works with
An MMF is first a UCITS or an AIF. Under Article 7, the UCITS Directive or AIFMD still applies unless the regulation says otherwise. Article 8(2) switches off the UCITS investment-policy articles, while Article 9(3) keeps the UCITS rule on ancillary liquid assets. National law supplies the fund framework and the penalties required by Article 40. In Ireland the MMF-specific measure is the European Union (Money Market Funds) Regulations 2018 (summary). A UCITS MMF there also sits under the UCITS Regulations 2011 (summary). In Luxembourg, a UCITS MMF sits under Part I of the Law of 17 December 2010 (summary).
The Commission has reported twice under Article 46. Its report of 20 July 2023, COM(2023) 452, found the framework had held through the March 2020 stress. Its follow-up of 11 May 2026, COM(2026) 350, set weekly-asset "market resilience levels" of 20% for VNAV funds and 40% for CNAV and LVNAV funds. These are benchmarks for risk managers and supervisors, not new legal minimums.
In practice: the legal minimum for an LVNAV fund's weekly assets remains 30% (Art. 24(1)(e)). The 2026 report names 40% as a non-binding resilience benchmark for closer monitoring. A fund between the two meets the weekly minimum but sits below the benchmark; its other requirements are assessed separately.
To verify
- Stress-test frequency: whether "at least bi-annual" in Article 28(3) means twice a year, per ESMA's MMF Q&A.
- Stress-test parameters: the current edition of ESMA's annual guidelines under Article 28(7) and its reference scenarios.
- Next step after COM(2026) 350: whether the Commission follows the 2026 report with a legislative proposal or ESMA guidance.
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