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J.P. Morgan Global Liquidity

Frequently Asked Questions: European Money Market Fund Regulations

TIMELINE
What is the implementation timeline?

There are just 3 months until the new regulations are applied to J.P. Morgan Global Liquidity’s Luxembourg domiciled money market funds (MMFs).

What is the planned product range in MMFs for J.P. Morgan Asset Management clients?
What product range in MMFs does J.P. Morgan Asset Management plan to offer?

What do the new classifications mean?

The new regulations provide investors with a high degree of optionality for investing their short–term cash, with two types of money market funds (“MMFs”) and three structural options available.

MMFs must be classified as either a Short–term MMF or a Standard MMF:

  • Short–term MMFs are funds that maintain the existing conservative investment restrictions currently provided under the ESMA1 Short–Term Money Market Fund definition, including a maximum WAM2 of 60 days and maximum WAL3 of 120 days
  • Standard MMFs reflect the existing ESMA Money Market Fund definition, including a maximum WAM of 6 months and maximum WAL of one year

MMFs may be structured as Public Debt Constant NAV (“CNAV”) MMFs, Low Volatility NAV (“LVNAV”) MMFs or as Variable NAV (“VNAV”) MMFs:

  • Public Debt CNAV MMFs must invest 99.5% of their assets into government debt instruments, reverse repos collateralised with government debt, and cash, and are permitted to maintain a constant dealing NAV
  • LVNAV MMFs are permitted to maintain a constant dealing NAV provided that certain criteria are met, including that the market NAV of the fund does not deviate from the dealing NAV by more than 20 basis points
  • VNAV MMFs price their assets using market pricing and therefore offer a fluctuating dealing NAV

1 European Securities and Markets Authority
2 Weighted average maturity
3 Weighted average life

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NOT FOR RETAIL DISTRIBUTION: This communication has been prepared exclusively for institutional, wholesale, professional clients and qualified investors only, as defined by local laws and regulations.

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