UK regulator proposes tougher rules for money market funds

BoE welcomes FCA move and warns of wider risk of “dysfunction” in core markets

Regulation and compliance

The UK’s Financial Conduct Authority has proposed measures that would require money market funds (MMFs) to maintain greater holdings of liquid assets.

The FCA published a consultation today (December 6) setting out a tougher regulatory regime designed to reduce the risk of financial instability due to a run on MMFs.

MMFs pose some bank-like risks by allowing investors to rapidly withdraw funds, even where underlying asset holdings are illiquid. Because of  their interconnections with wider markets

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