IOSCO Updates Reports on Money Market Fund Regulation and Securitizations

IOSCO updated two of its 2015 peer reviews concerning the (i) "Regulation of Money Market Funds ("MMF")" and the (ii) "Implementation of Incentive Alignment Recommendations for Securitisation." The reports track the progress of 24 Financial Stability Board jurisdictions "in adopting legislation, regulation and other policies covering MMF and securitization, which are G20 priority reform areas."

The first report, on MMF regulation, covered three major areas: (i) issues associated with valuation practices of MMFs, (ii) effectiveness of liquidity management for MMFs, and (iii) risks and issues that may affect the stability of MMFs that offer a stable Net Asset Value ("NAV"). IOSCO found that:

• MMFs in most jurisdictions, with three exceptions, have implemented a fair value approach for valuation;
• with respect to liquidity management, nine of the 24 jurisdictions did not have draft implementation measures in 2018 and eight still did not in 2019; and
• the 13 jurisdictions that permit MMFs that offer a stable NAV are regulated with adequate safeguards.

The second report, concerning prior incentive alignment recommendations for securitizations, covered two areas: (i) evaluating incentives across the securitization value chain, and (ii) setting out the elements of the incentive alignment approach, including risk retention. The report found "mixed" progress across the jurisdictions, with only half of the jurisdictions having finalized measures for incentive alignment and less than half for disclosure requirements.