FCA Sets Next Steps for UK Money Market Fund Resilience Rules

The Financial Conduct Authority set out next steps on June 8 for new UK money market fund rules and guidance, following government plans to replace the current UK Money Market Funds Regulation.

The FCA said money market funds remain important for cash management and as an alternative or complement to bank deposits, but recent stress episodes have shown the need to strengthen resilience. After consultation feedback and further analysis with the Bank of England, the regulator now plans a new rule requiring all MMFs to hold sufficient liquidity for adequate resilience.

The FCA said it intends to retain current minimum weekly liquid asset requirements in rules, while setting supervisory expectations in guidance: stable NAV MMFs would be expected to hold 40% weekly liquid assets, and variable NAV MMFs 20%. It also plans to proceed with measures including delinking liquidity levels from the need to consider liquidity fees or redemption gates, plus enhanced know-your-customer requirements around investor concentration and correlated withdrawals.

The government is expected to introduce legislation to repeal the current MMF regulation by the end of 2026, with the FCA planning its new rules to the same timetable.

Why it matters

Money market funds are widely used for cash allocation, collateral planning and short-term liquidity. Changes to liquidity expectations can affect fund yields, redemption behavior and how brokers or platforms present cash-like products to clients.

What to watch next

Watch for the FCA policy statement, interim final guidance on weekly liquid asset levels and any platform changes to MMF disclosures before the new regime takes effect.