Monday August 1 2011

News Source: Global Disclosures

Focus: Takeover and Acquisition

Type: General

Country: European Union




Relevant Directive Rule

The criteria dealing with this issue are set out in Article 50 (1.a)

UCITS IV

Overview

GILTS and T-BILLS normally are classified as Money Market Instruments. To check if your security classifies as a Money Market Instrument then please ensure that they meet the criteria set out below.

Money Market Instruments are those that are normally dealt in on the money market which are liquid, and have a value which can be accurately determined at any time. These shall be understood by a reference to the following paragraphs:

(a) Financial instruments which are admitted to trading or dealt in on a regulated markets; and

(b) Financial instruments which are not admitted to trading.

The reference to money market instruments as instruments normally dealt in on the money market shall be understood as a reference to financial instruments which fulfil one of the following criteria:

(a) They have a maturity at issuance of up to and including 397 days;

(b) They have a residual maturity of up to and including 397 days;

(c) They undergo regular yield adjustments in line with money market conditions at least every 397 days;  and

(d) Their risk profile, including credit and interest rate risks, corresponds to that of financial instruments which have a maturity as referred to in subparagraphs (a) or (b), or are subject to a yield adjustment as referred to in subparagraph (c).

The reference to money market instruments as instruments which are liquid shall be understood as a reference to financial instruments which can be sold at limited cost in an adequately short time frame, taking into account the obligation of the UCITS to repurchase or redeem its units at the request of any unit holder.

When assessing the liquidity of a money market instrument, the following cumulative factors have to be taken into account:

At the instrument level:

(i) Frequency of trades and quotes for the instrument in question;

(ii) Number of dealers willing to purchase and sell the instrument, willingness of the dealers to make a market in the instrument in question, nature of market place trades (times needed to sell the instrument, method for soliciting offers and mechanics of transfer);

(iii) Size of issuance/program;

(iv) Possibility to repurchase, redeem or sell the money market instrument in a short period (e.g. seven business days), at limited cost, in terms of low fees and bid/offer prices and with very short settlement delay.

The reference to money market instruments as instruments which have a value which can be accurately determined at any time shall be understood as a reference to financial instruments for which accurate and reliable valuations systems, which fulfil the following criteria, are available:

(a) They enable the UCITS to calculate a net asset value in accordance with the value at which the financial instrument held in the portfolio could be exchanged between knowledgeable willing parties in an arm’s length transaction;

(b) They are based either on market data or on valuation models including systems based on amortised costs.

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