Britain Confirms Money Market Fund Reform, Requiring Higher Liquidity by End-2026
Updated
Updated · Reuters · May 14
Britain Confirms Money Market Fund Reform, Requiring Higher Liquidity by End-2026
4 articles · Updated · Reuters · May 14
Britain said money market funds will have to hold higher liquidity under confirmed reform plans, with the new regime targeted by the end of the year pending parliamentary approval.
The overhaul responds to March 2020 turmoil, when COVID-19's dash for cash triggered heavy redemptions and liquidity strains across the sector.
The Financial Conduct Authority had consulted on changes in 2023 aimed at making it easier for funds to sell assets during periods of stress.
The push follows a Bank of England recommendation to strengthen sterling money market funds, which companies use for day-to-day funding and overnight cash management.
Will forcing money funds to hold more cash just push corporate investors toward riskier, unregulated alternatives?
As regulators patch old MMF risks, can tokenization solve the liquidity problem or just create a faster financial crisis?