22.07.2020

MMF (Money Market Funds/Shadow Banking) Dictionary (Jargon)

This Jargon Dictionary of Money Market Funds is a section of a financial regulatory dictionary. And it has a specific regulation. The language of the financial regulatory field is complex and an entry barrier to understanding its regulation. This work is informative and lacking in scientific character. It is only an approach that facilitates access to a complex subject. This same work and this particular section are available in Spanish.

Por Sanz González , María

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Concept	Definition
SHORT-TERM ASSETS	Financial assets with a residual maturity not exceeding 2 years
TITLE TRANSFER COLLATERAL ARRANGEMENT	An arrangement, including repurchase agreements, under which a collateral provider transfers full ownership of financial collateral to a collateral taker for the purpose of securing or otherwise covering the performance of relevant financial obligations;
SECURITY COLLATERAL ARRANGEMENT	An arrangement under which a collateral provider provides financial collateral by way of security in favour of, or to, a collateral taker, and where the full ownership of the financial collateral remains with the collateral provider when the security right is established;
COMPETENT AUTHORITY OF THE MMF	(a) for UCITS, the competent authority of the UCITS home Member State designated in accordance with Article 97 of Directive 2009/65/EC; (b) for EU AIFs, the competent authority of the home Member State of the AIF as defined in Article 4(1)(p) of Directive 2011/61/EU; (c) for non-EU AIFs, any of the following: (i) the competent authority of the Member State where the non-EU AIF is marketed in the Union without a passport; (ii) the competent authority of the EU AIFM managing the non-EU AIF, where the non-EU AIF is marketed in the Union with a passport or is not marketed in the Union; (iii) the competent authority of the Member State of reference if the non-EU AIF is not managed by an EU AIFM and is marketed in the Union with a passport
FINANCIAL COUNTERPARTY	(a)an investment firm authorised in accordance with Directive 2014/65/EU of the European Parliament and of the Council ; (b)a credit institution authorised in accordance with Directive 2013/36/EU of the European Parliament and of the Council or with Regulation (EU) No 1024/2013; (c)an insurance undertaking or a reinsurance undertaking authorised in accordance with Directive 2009/138/EC of the European Parliament and of the Council ; (d)a UCITS and, where relevant, its management company, authorised in accordance with Directive 2009/65/EC; (e)an AIF managed by AIFMs authorised or registered in accordance with Directive 2011/61/EU; (f)an institution for occupational retirement provision authorised or registered in accordance with Directive 2003/41/EC of the European Parliament and of the Council ; (g)a central counterparty authorised in accordance with Regulation (EU) No 648/2012; (h)a central securities depository authorised in accordance with Regulation (EU) No 909/2014 of the European Parliament and of the Council ; (i)a third-country entity which would require authorisation or registration in accordance with the legislative acts referred to in points (a) to (h) if it were established in the Union;
NON-FINANCIAL COUNTERPARTY	An undertaking established in the Union or in a third country other than the entities referred to as financial counterparty
CREDIT INSTITUTION	An undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account
SHORT-TERM MMF	An MMF that invests in eligible money market instruments referred to in Article 10(1) and is subject to the portfolio rules set out in Article 24 of Regulation (EU) 2017/1131
PUBLIC DEBT CONSTANT NET ASSET VALUE MMF	An MMF: (a) that seeks to maintain an unchanging net asset value (NAV) per unit or share; (b) where the income in the fund is accrued daily and can either be paid out to the investor or used to purchase more units or shares in the fund; (c) where assets are generally valued according to the amortised cost method and where the NAV is rounded to the nearest percentage point or its equivalent in currency terms; and (d) that invests at least 99,5 % of its assets in instruments referred to in Article 17(7) of Regulation (EU) 2017/1131 , reverse repurchase agreements secured with government debt referred to in Article 17(7) and in cash
LOW VOLATILITY NET ASSET VALUE MMF OR LVNAV MMF	An MMF that complies with the specific requirements laid down in Articles 29, 30 and 32 and in Article 33(2)(b) of Regulation (EU) 2017/1131
VARIABLE NET ASSET VALUE MMF OR VNAV MMF	An MMF that complies with the specific requirements laid down in Articles 29 and 30 and in Article 33(1) of Regulation (EU) 2017/1131
STANDARD MMF	An MMF that invests in eligible money market instruments referred to in Article 10(1) and (2) and is subject to the portfolio rules set out in Article 25 of Regulation (EU) 2017/1131
MANAGER OF AN MMF	In the case of an MMF that is a UCITS, the UCITS management company, or the UCITS investment company in the case of a self-managed UCITS, and, in the case of an MMF that is an AIF, an AIFM or an internally-managed AIF
FINANCIAL INSTRUMENT	(1)Transferable securities; (2)Money-market instruments; (3)Units in collective investment undertakings; (4)Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash; (5)Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event; (6)Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled; (7)Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments; (8)Derivative instruments for the transfer of credit risk; (9)Financial contracts for differences; (10)Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF; (11) Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).
MONEY MARKET INSTRUMENTS	Instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time, and instruments as referred to in Article 3 of Commission Directive 2007/16/EC
AMORTISED COST METHOD	A valuation method which takes the acquisition cost of an asset and adjusts that value for amortisation of premiums or discounts until maturity
SECURITIES FINANCING TRANSACTION OR SFT	(a) a repurchase transaction; (b) securities or commodities lending and securities or commodities borrowing; (c) a buy-sell back transaction or sell-buy back transaction; (d) a margin lending transaction;
MARGIN LENDING TRANSACTION	A transaction in which a counterparty extends credit in connection with the purchase, sale, carrying or trading of securities, but not including other loans that are secured by collateral in the form of securities
REPURCHASE TRANSACTION	A transaction governed by an agreement by which a counterparty transfers securities, commodities, or guaranteed rights relating to title to securities or commodities where that guarantee is issued by a recognised exchange which holds the rights to the securities or commodities and the agreement does not allow a counterparty to transfer or pledge a particular security or commodity to more than one counterparty at a time, subject to a commitment to repurchase them, or substituted securities or commodities of the same description at a specified price on a future date specified, or to be specified, by the transferor, being a repurchase agreement for the counterparty selling the securities or commodities and a reverse repurchase agreement for the counterparty buying them;
BUY-SELL BACK TRANSACTION	A transaction by which a counterparty buys or sells securities, commodities, or guaranteed rights relating to title to securities or commodities, agreeing, respectively, to sell or to buy back securities, commodities or such guaranteed rights of the same description at a specified price on a future date, that transaction being a buy-sell back transaction for the counterparty buying the securities, commodities or guaranteed rights, and a sell-buy back transaction for the counterparty selling them, such buy-sell back transaction or sell-buy back transaction not being governed by a repurchase agreement or by a reverse-repurchase agreement
REPURCHASE AGREEMENT	Any agreement in which one party transfers securities or any rights related to that title to a counterparty, subject to a commitment to repurchase them at a specified price on a future date specified or to be specified
REVERSE PURCHASE AGREEMENT	Any agreement in which one party receives securities, or any rights related to a title or security from a counterparty subject to a commitment to sell them back at a specified price on a future date specified or to be specified
SECURITIES OR COMMODITIES LENDING OR SECURITIES OR COMMODITIES BORROWING	A transaction by which a counterparty transfers securities or commodities subject to a commitment that the borrower will return equivalent securities or commodities on a future date or when requested to do so by the transferor, that transaction being considered as securities or commodities lending for the counterparty transferring the securities or commodities and being considered as securities or commodities borrowing for the counterparty to which they are transferred;
SECURITIES LENDING AND SECURITIES BORROWING	Any transaction in which an institution or its counterparty transfers securities subject to a commitment that the borrower will return equivalent securities at some future date or when requested to do so by the transferor, that transaction being known as ‘securities lending’ for the institution transferring the securities and being known as ‘securities borrowing’ for the institution to which they are transferred
REUSE	The use by a receiving counterparty, in its own name and on its own account or on the account of another counterparty, including any natural person, of financial instruments received under a collateral arrangement, such use comprising transfer of title or exercise of a right of use in accordance with Article 5 of Directive 2002/47/EC but not including the liquidation of a financial instrument in the event of default of the providing counterparty
BRANCH	A place of business other than the head office which is part of a counterparty and which has no legal personality
TOTAL RETURN SWAP	A derivative contract as defined in point (7) of Article 2 of Regulation (EU) No 648/2012 in which one counterparty transfers the total economic performance, including income from interest and fees, gains and losses from price movements, and credit losses, of a reference obligation to another counterparty
MARKING TO MARKET	The valuation of positions at readily available close out prices that are sourced independently, including exchange prices, screen prices or quotes from several independent reputable brokers
MARKING TO MODEL	Any valuation which has to be benchmarked, extrapolated or otherwise calculated from one or more market inputs
TRANSFERABLE SECURITIES	(i) shares in companies and other securities equivalent to shares in companies (shares); (ii) bonds and other forms of securitised debt (debt securities); (iii) any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange, and instruments as referred to in Article 2(1) of Directive 2007/16/EC
LEGAL MATURITY	The date when the principal of a security is to be repaid in full and which is not subject to any optionality
WEIGHTED AVERAGE MATURITY OR WAM	The average length of time to legal maturity or, if shorter, to the next interest rate reset to a money market rate, of all of the underlying assets in the MMF reflecting the relative holdings in each asset
RESIDUAL MATURITY	The length of time remaining until the legal maturity of a security
SHORT SALE	Any sale by an MMF of an instrument which the MMF does not own at the time of entering into the agreement to sell, including such sale where, at the time of entering into the agreement to sell, the MMF has borrowed or agreed to borrow the instrument for delivery at settlement, not including: (a) a sale by either party under a repurchase agreement where one party has agreed to sell to the other a security at a specified price with a commitment from the other party to sell the security back at a later date at another specified price; or (b) an entry into a futures contract or other derivative contract where it is agreed to sell securities at a specified price at a future date
WEIGHTED AVERAGE LIFE OR WAL	The average length of time to legal maturity of all of the underlying assets in the MMF reflecting the relative holdings in each asset