On December 2nd 2014 the CSSF issued Circular 14/598 adopting the opinion issued by the European Securities and Markets Authority ("ESMA") on August 22nd 2014 (the "Opinion") on the application of guidelines issued by the Committee of European Securities Regulators ("CESR") in May 2010, on a common definition of European money market funds ("MMF") (Ref. CESR/10-049, hereafter the "CESR guidelines").
"The CESR guidelines entered into force on July 1st 2011."
The Opinion was commented upon in a previous article dated August 2014. Circular 14/598 makes the amendments to the CESR guidelines introduced by the Opinion mandatory in Luxembourg.
Thus, when performing its own assessment of whether a money market instrument is of high quality, a management company shall take into account previous ratings of the instrument, carried out by credit rating agencies registered and supervised by ESMA and while there should be no mechanistic reliance on such external ratings, a downgrade below the two highest short-term credit ratings of any agency registered and supervised by ESMA should lead to a new assessment of the credit quality of the money market instrument.