UK Money Market Fund Reform: What FCA Managers Must Watch

ByOfficer

Last updated: June 2026

Get the UK Money Market Fund reform wrong, and the mistake shows up in two places at once: the weekly liquid asset buffer your fund holds, and the answer you give your supervisor when asked why it sits there. In a statement published on 8 June 2026, the FCA set out updated proposals under which it intends to retain the current minimum liquidity floors and add a strong supervisory expectation through guidance. The FCA said the proposals remain subject to final consideration and sign-off.

That gap matters. Managers who provisioned for a hard 50 percent weekly liquid asset floor should now reassess against the FCA’s updated proposal, while tracking the policy statement and interim final guidance before treating the position as final. Managers who assume nothing has moved because the rulebook minimum stays at 30 percent are missing the supervisory expectation that will now sit beside it. Neither reading is right.

This change note covers where the UK Money Market Fund reform now stands: what the FCA kept, dropped and added, and when the rules arrive. It applies to UK-domiciled money market funds.

Related reading: our coverage of the EU Money Market Fund Regulation review

What the UK Money Market Fund reform changes

The reform began with consultation paper CP23/28, “Updating the regime for Money Market Funds”, published on 6 December 2023 and closed on 8 March 2024. It proposed two structural changes. The first was a sharp rise in minimum liquid assets for every fund type, taking daily liquid assets to 15 percent and weekly liquid assets to 50 percent. The second was delinking, which cuts the automatic tie between a fund’s liquidity level and the point at which its manager must consider fees or gates.

Responses split cleanly. Delinking drew near-universal support; the proposed jump in liquidity levels drew the opposite, with most respondents doubting that holding half a fund in weekly liquid assets was workable in a real stress. The 8 June 2026 statement keeps what the industry backed and rebuilds what it pushed against. The binding minimums stay in the rules. A supervisory expectation, set out separately in guidance, asks stable NAV funds to hold 40 percent in weekly liquid assets and variable NAV funds to hold 20 percent. The Bank of England’s system-wide exploratory scenario exercise fed the revised analysis, suggesting MMF outflows in some scenarios may run lower than in earlier stress episodes.

The onshored rules the reform sits on

UK money market funds do not run on the EU Money Market Funds Regulation. They run on the onshored version: Regulation (EU) 2017/1131 as it had effect on 31 December 2020, brought into domestic law by the European Union (Withdrawal) Act 2018 and adjusted by The Money Market Funds (Amendment) (EU Exit) Regulations 2019. Reading a UK obligation off the current EU regulation is the classic onshoring trap.

The onshored regime keeps three fund types: public debt constant net asset value funds, low volatility net asset value funds, and variable net asset value funds. Public debt CNAV and LVNAV funds can only be short-term; variable NAV funds run as both short-term and standard. The minimums differ by type. Public debt CNAV and LVNAV funds hold at least 10 percent in daily liquid assets and 30 percent in weekly liquid assets. Variable NAV funds hold at least 7.5 percent daily and 15 percent weekly. Those floors are what the reform leaves untouched in the rules.

Where teams get this wrong is treating the daily and weekly figures as interchangeable cushions. Daily liquid assets convert to cash within a day; weekly liquid assets cover a one-week horizon. The FCA does not currently plan new guidance on daily liquid asset levels, so the updated supervisory reference point is focused on weekly liquid assets.

From a 50 percent floor to a 40 percent expectation

The biggest change is how the weekly target is enforced. The FCA has moved away from its consultation proposal to write higher weekly minimums into binding rules. It intends to retain the existing minimum WLA requirements and set out in guidance a strong supervisory expectation of 40 percent weekly liquid assets for stable NAV MMFs and 20 percent for variable NAV MMFs.

The distinction is not cosmetic. A rulebook minimum is a hard line a fund must not cross. A supervisory expectation in guidance is a level the regulator expects a manager to plan and operate to, and to explain any departure from. A manager who treats the 40 percent figure as a hard floor will tie up liquidity it does not strictly need. A manager who ignores it because the rule still says 30 percent will be answering hard questions at the next supervisory touchpoint.

Delinking: cutting the automatic tie to fees and gates

Delinking is the piece the industry asked for, and it survives intact. Look at the current trigger. Under Article 34 of the onshored Money Market Funds Regulation, a public debt CNAV or LVNAV fund whose weekly liquid assets fall below 30 percent, on a day when net redemptions exceed 10 percent of total assets, must put liquidity fees, redemption gates or a suspension in front of its board. A separate trigger bites if weekly liquid assets fall below 10 percent.

That trigger creates a first-mover problem. As weekly liquid assets slide toward the threshold, investors who understand the mechanism redeem early, before a fee or gate lands, which pushes liquidity down faster and sharpens the incentive for the next investor. Delinking breaks the loop by removing the automatic regulatory link, so a manager can use liquidity as intended without flipping a switch that invites a run.

One point gets lost: delinking does not abolish liquidity fees, redemption gates or suspensions. Those tools remain available, but they are no longer tethered to a liquidity figure, so using them becomes a managed judgement rather than a tripwire. Anyone telling investors that UK money market funds can no longer gate has misread the reform.

Know your customer and investor concentration

Alongside delinking, the FCA intends to introduce enhanced know-your-customer requirements focused on investor concentration and the risk of correlated withdrawal. A fund whose register is dominated by a few large, correlated holders faces a sharper redemption shock than one with a diversified base, and a manager who cannot see that concentration cannot plan liquidity around it.

This is the operational sleeper in the package. Liquidity ratios are already produced and monitored. Investor concentration data often sits further from the reporting function, inside transfer agency or distribution records, and is harder to assemble at fund level on time. Managers running UK funds through external administrators will need to confirm the concentration view can be built when the rules require it. Teams that have worked through the AIFMD II liquidity management tools regime will recognise the data-plumbing problem.

When the new rules land

The timing runs through the wider rewrite of UK financial services law. Under the Financial Services and Markets Act 2023, the government is repealing assimilated EU law piece by piece and moving the substance into the regulators’ rulebooks, a programme the Treasury calls the Smarter Regulatory Framework. The Money Market Funds Regulation is one of those pieces.

The government expects legislation to repeal the Money Market Funds Regulation to be introduced by the end of 2026, and the FCA plans to make its new MMF rules to that timescale. Before the policy statement that carries the detail, the FCA plans to publish interim final guidance on UK weekly liquid asset levels, so managers get the supervisory expectation in writing first. This is not a quiet lift-and-shift. The legal wrapper is changing because the government intends to replace the UK MMFR and move most requirements for UK MMFs into FCA rules and guidance.

Frequently Asked Questions

Is the UK Money Market Fund reform raising the minimum weekly liquid asset requirement?

Not under the FCA’s updated proposal. The FCA intends to retain the current minimum weekly liquid asset requirements in its rules. The 40 percent and 20 percent figures are expected to sit in guidance as a strong supervisory expectation, not as a new binding floor.

What are the current UK MMF liquidity thresholds?

Public debt CNAV and LVNAV funds must hold at least 10 percent in daily liquid assets and 30 percent in weekly liquid assets. Variable NAV funds must hold at least 7.5 percent daily and 15 percent weekly. The reform adds no new guidance on daily liquid assets.

What does delinking mean for stable NAV funds?

It removes the automatic regulatory link between a fund’s weekly liquid asset level and the point at which its manager must consider liquidity fees, redemption gates or a suspension. The tools stay available but are no longer triggered mechanically by a liquidity figure.

When can a fund fall below the 40 percent or 20 percent expectation?

The FCA states a fund should sit temporarily below the expected weekly level only to meet redemptions, or for reasons beyond the manager’s control. It is not a routine operating buffer.

When will the new UK MMF rules apply?

The government expects to introduce repeal legislation by the end of 2026, and the FCA plans to make its new rules to that timescale. Interim final guidance on weekly liquid asset levels is planned before the policy statement.

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Key Takeaways

  • On 8 June 2026 the FCA set out updated proposals to retain the current minimum weekly and daily liquid asset requirements rather than raise them as CP23/28 proposed.
  • A supervisory expectation in guidance asks stable NAV funds to hold 40 percent weekly liquid assets and variable NAV funds to hold 20 percent.
  • A fund should only sit below that expectation to meet redemptions or for reasons beyond the manager’s control.
  • Delinking goes ahead, removing the automatic Article 34 link between liquidity levels and the requirement to consider fees, gates or suspensions.
  • Enhanced know-your-customer requirements on investor concentration are intended.
  • The UK regime is the onshored Money Market Funds Regulation, not the live EU regulation, and the two are diverging.
  • The government expects repeal legislation by the end of 2026.

Sources and References

  • FCA, “FCA update on reforms to the UK Money Market Fund Regulation” (statement, 8 June 2026): https://www.fca.org.uk/news/statements/reforms-uk-money-market-fund-regulation
  • FCA, CP23/28 “Updating the regime for Money Market Funds” (consultation page): https://www.fca.org.uk/publications/consultation-papers/cp23-28-updating-regime-money-market-funds
  • FCA, CP23/28 consultation paper (PDF): https://www.fca.org.uk/publication/consultation/cp23-28.pdf
  • Money Market Funds Regulation (onshored Regulation (EU) 2017/1131), legislation.gov.uk: https://www.legislation.gov.uk/eur/2017/1131/body
  • HM Treasury, “Money Market Funds Framework Policy Note” (December 2023): https://assets.publishing.service.gov.uk/media/656f51c49462260721c56960/Money_Market_Funds_Framework_Policy_Note.pdf
  • Bank of England, system-wide exploratory scenario exercise: https://www.bankofengland.co.uk/financial-stability/boe-system-wide-exploratory-scenario-exercise

Sizing your weekly liquid asset buffers before the rules land

The job now is to build to two numbers at once: the rulebook minimum a fund cannot cross, and the supervisory expectation it must plan to and explain any drop below. Managers who track both, and can show why their weekly liquid assets sit where they do, will have the easier conversation when the guidance and policy statement arrive. The reform did not ask UK money market funds to hold more liquidity by rule. It asked them to hold the right amount, and account for it.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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