UK Regulator Tightens Rules to Avert Future Cash Crunch

The proposals would require money market funds to maintain greater liquidity to meet withdrawals during turbulent periods.

The skyline of the financial district is seen as people walk through the Square Mile in London on Jan. 31, 2023. Leon Neal/Getty Images

The UK’s financial regulator said on June 8 that it plans to tighten rules for money market funds, following the COVID-19 pandemic’s impact on the economy, which exposed vulnerabilities in the sector during a period of market turmoil.

The Financial Conduct Authority (FCA) said the reforms follow government plans to replace the UK’s current Money Market Funds Regulation and are intended to ensure that funds can better withstand periods of market stress.