CIS 5A.5 Money market schemes

This section (CIS 5A.5) applies to authorised fund managers of money market schemes.

1. (1)

   The scheme property of a money market scheme must, except where otherwise provided in the rules in this chapter, consist of "money market scheme assets".

2. (2)

   For this purpose, "money market scheme assets" means any of:

   1. (a)

      cash and near cash;

   2. (b)

      bills of exchange accepted by an eligible institution or an approved bank, if repayable within 12 months;1

   3. (c)

      instruments creating or acknowledging indebtedness which are:

      1. (i)

         repayable within 12 months;

      2. (ii)

         not subordinated; and

      3. (iii)

         either approved securities or investments which are issued by an eligible institution or an approved bank otherwise than in return for a deposit in (a);1

   4. (d)

      a deposit which would be within (a) (near cash) except that it is repayable within six months (instead of immediately) and without payment of a penalty exceeding seven days' interest calculated at ordinary commercial rates; and

   5. (e)

      units in one or more regulated collective investment schemes, each of which is either a money market scheme or a scheme of a category that is equivalent to a money market scheme.

3. (3)

   The following also apply to money market schemes:

   1. (a)

      CIS 5A.2 (General investment powers and limits for authorised funds);

   2. (b)

      CIS 5A.4.6 R (2) (Investment in warrants and nil or partly paid securities);

   3. (c)

      CIS 5A.13 (Efficient portfolio management);

   4. (d)

      CIS 5A.14 (Stock lending);

   5. (e)

      CIS 5A.15 (Cash, borrowing, lending and other provisions); and

   6. (f)

      CIS 5A.16 (Cover for sales).

1. (1)

   At least 50% in value of the scheme property of a money market scheme must consist of instruments or deposits which are permitted under CIS 5A.5.3 R (Money market schemes: general) and which are:

   1. (a)

      redeemable or repayable within two weeks; or

   2. (b)

      in the case of instruments, capable of being transferred without the consent of a third party (and for this purpose the issuer of the instrument must be regarded as a third party).

2. (2)

   Not more than 80% in value of the scheme property is to consist of transferable securities, in accordance with CIS 5A.4 (Securities schemes) (but excluding investment in units in collective investment schemes under CIS 5A.4.5 R).

1. (1)

   This rule (CIS 5A.5.5 R) does not apply to a money market scheme until the date on which the value of its scheme property first exceeds £1 million (or the equivalent in the base currency of the money market scheme).

2. (2)

   Not more than 5% in value of the scheme property of a money market scheme is to consist of instruments issued by any one issuer; but this limit does not apply to instruments which are government and public securities.

3. (3)

   Not more than 30% in value of the scheme property is to consist of government and public securities of the same issue.

4. (4)

   Where more than 35% in value of the scheme property is invested in government and public securities, it must include such securities of at least six different issues.

5. (5)

   Not more than 5% in value of the scheme property is to consist of units within CIS 5A.5.3 R (2)(e) (Money market schemes: general).

6. (6)

   Whenever the total value of the scheme property of a money market scheme which is held on deposit is more than £1 million:

   1. (a)

      not more than 10% in value is to be kept on deposit with any one person;

   2. (b)

      for the purposes of (a):

      1. (i)

         the depositary and its associates are regarded as one person;

      2. (ii)

         the manager and its associates are regarded as one person; and

      3. (iii)

         each director of an ICVC including the ACD and his or its associates are regarded as one person; and

   3. (c)

      the figure of 10% in (a) may be increased to 20% if:

      1. (i)

         the person is an eligible institution and is not one of the persons referred to in (b); and

      2. (ii)

         the amount of the deposit does not exceed 10% in value of that eligible institution's issued capital and reserves as shown in its most recently published annual accounts.