[PASSED] Repeal "Money Markets Funds Protocol"

[Goobergunchia]

The target resolution, GA#746, can be found here. Its original drafting thread is here.

The World Assembly (WA),

Noting the use of money markets funds (MMFs) in some WA states, both for investors to access high quality, liquid debt instruments, and for debtors to gain short-term funding;

Acknowledging that liquidity is a persistent issue for MMFs due to the potential for rapid redemptions, forcing sales of financial instruments held in an MMF at potentially disadvantageous prices and hurting the interests of fund investors that remain in the fund;

Desiring a common solution to fill gaps in regulations across WA states, especially when investors buy MMFs from different WA states;

The WA hereby enacts as follows:

1. Definitions.
   
   
   1. "Authority" means one or more government entities designated by a WA state to enforce and interpret this resolution.
      
   2. "GF" means the WA General Fund.
      
   3. "MMFs" refer to investment funds that invest in liquid, short-term investments with high credit ratings, as defined by each WA state, as a higher yielding alternative to bank accounts but with potentially higher risks for investors than putting their savings in a bank account. In this resolution, MMFs exclude any funds guaranteed by a bank or financial institution as to principal and interest.
      
   4. "WA organs" means any of the sub-committees of the WA.
2. Liquidity and quality. Each authority is to promulgate minimum standards on:
   
   
   1. liquidity in assets held by an MMF;
      
   2. credit quality, diversification, and counterparty risk assessment for an MMF;
      
   3. asset eligibility in an MMF, such as:
      
      
      1. investments in non-WA states;
         
      2. investments in states subject to sanctions from the WA (or discouraged or prohibited pursuant to local laws or WA resolutions);
         
      3. investments in assets in currencies other than the reporting currency of the MMF;
   4. use of derivatives for exposure to underlying assets;
      
   5. the use of stand-by credit facilities from other financial institutions to meet redemption requests.
3. Redemption. Each authority is to ensure that:
   
   
   1. redemptions cannot discriminate between investors from different WA states;
      
   2. minimum buffers at the fund level are imposed to meet redemption requests in stressed market conditions;
      
   3. no redemption gates may be imposed by a manager of an MMF to avoid aggravating investor runs;
      
   4. an MMF may only impose redemption fees that allocate the costs of providing liquidity to redeeming investors to protect remaining investors from dilution when selling its holdings is costly.
4. Stress tests. Each authority is to ensure that:
   
   
   1. stress tests are conducted regularly regarding liquidity, trading velocity in the event of rapid redemptions, credit risks, and other risk factors in an MMF;
      
   2. the results of such stress tests are available publicly through convenient means.
5. Stable NAV funds.
   
   
   1. If an authority allows MMFs to be priced on a stable net asset value (NAV) basis (such as a quoted price of one currency unit), an MMF may put in place a reverse distribution mechanism during a negative interest rate environment to maintain a stable NAV per unit.
      
   2. Each authority is to determine whether stable NAV funds are permitted in that WA state.
6. Disclosures. Each authority is to ensure that each MMF regularly discloses:
   
   
   1. fee structures (both actual and potential additional expenses);
      
   2. policies for handling liquidity issues in times of stress;
      
   3. record in compliance with all standards set forth in this resolution, and policies and procedures to ensure ongoing compliance;
      
   4. liquidity position, performance, and portfolio holdings;
      
   5. any other pertinent information deemed necessary for regular disclosure by an authority.
7. Marketing. Each authority is to ensure that each MMF is marketed and subscribed such that:
   
   
   1. Potential investors have the knowledge, experience, and capability, as determined by the authority, to purchase MMFs;
      
   2. MMFs (as defined in this resolution) as not marketed as a direct substitute as a bank deposit.
8. Bailouts.
   
   
   1. No WA state may use any funds (be it in grants, loans, or other forms) originating from GF to provide liquidity or principal protection to an MMF.
      
   2. This does not preclude a WA state from providing such protection to MMFs using its own funds.
9. Jurisdiction.
   
   
   1. This resolution does not regulate whether MMFs can be sold at all in a WA state.
      
   2. If a MMF incorporated in one WA state is being sold in another WA state, both the WA state where the MMF is incorporated and the state where it is sold has jurisdiction. The MMF must comply with the regulations of the authorities of both states, including the availability of MMFs.
      
   3. In case of conflicts, the WA Judiciary Committee shall have jurisdiction on a de novo basis.

Current Repeal Text (Drafts in First Forum Reply):

Repeal "Money Markets Funds Protocol"
A resolution to repeal previously passed legislation.

Category: Repeal

Target: GA#746

Proposed by: The Overmind

---

General Assembly Resolution #746 “Money Markets Funds Protocol” (Category: Regulation; Area of Effect: Consumer Protection) shall be struck out and rendered null and void.

Asserting that the province of World Assembly legislation is the governance of issues of international importance, including, but not limited to, the establishment of universal rights, the negotiation of competing member nation interests, addressing nation-level decision-making on issues that have international impact, or the promotion of international harmony and peace,

Finding that the target deals with the far more granular issue of money market funds, a specific type of financial instrument that serves as a high-risk alternative to standard banking, a topic which is not only more effectively governed at the national and local level, but which does not align and may even wholly conflict with the economic system in many member nations,

Noting that, despite this, WA nations, acting through resolution-defined authorities, must both enact and make known minimum standards related to this type of financial instrument,

Particularly concerned that the language used to dictate this requirement and in many other areas of the resolution are written in impenetrable jargon that calls into question the understanding of legislators who ratified the resolution, in consideration of the highly specialized knowledge, or at least a large time investment, required to fully understand the ramifications thereof,

Unconvinced that the proviso at the end of the resolution which leaves to member nations the privilege to decide if money market funds are sold divests them of the imposed duties described,

Moreover reaffirming that the existence of many member nations for which money market funds are wholly irrelevant advertises the target's lack of international legislative propriety,

The General Assembly hereby repeals GA#746 "Money Markets Funds Protocol."

Number of words: 261
Number of characters: 1755

_{Credit is given to Tinhampton for most of the formatting of the repeal text box.}

Note: This has been submitted.

[The Overmind]

Asserting that the province of World Assembly legislation is the governance of issues of international importance, including, but not limited to, the establishment of universal rights, the negotiation of competing member nation interests, addressing nation-level decision-making on issues that have international impact, or the promotion of international harmony and peace,

Finding that the target deals with the far more granular issue of money market funds, a specific type of financial instrument that serves as a high-risk alternative to standard banking, a topic which is not only more effectively governed at the national and local level, but which does not commute and may even wholly conflict with the style of fiscal governance in many member nations,

Noting that, despite this, WA nations, acting through resolution-defined authorities, must both enact and make known minimum standards related to this type of financial instrument,

Particularly concerned that the language used to dictate this requirement and in many other areas of the resolution are written in impenetrable jargon that calls into question the understanding of legislators who ratified the resolution, in consideration of the highly specialized knowledge, or at least a large time investment, required to fully understand the ramifications thereof,

Suggesting that this is why the resolution passed when the "redemption" clause imposes upon WA nations, through their vested authorities, duties which are incoherent with fiscal governance that does not support the existence of money market funds, such as the maintenance of minimum buffers ahead of "stressed market conditions" when no such markets may even exist in the so-directed member nation,

Not believing that the proviso at the end of the resolution which leaves to member nations the privilege to decide if money market funds are honored divests them of the imposed duties described,

Moreover reaffirming that the existence of many member nations for which money market funds are wholly irrelevant advertises the target's lack of international legislative propriety,

The General Assembly hereby repeals GA#746 "Money Markets Funds Protocol."

Asserting that the province of World Assembly legislation is the governance of issues of international importance, including, but not limited to, the establishment of universal rights, the negotiation of competing member nation interests, addressing nation-level decision-making on issues that have international impact, or the promotion of international harmony and peace,

Finding that the target deals with the far more granular issue of money market funds, a specific type of financial instrument that serves as a high-risk alternative to standard banking, a topic which is not only more effectively governed at the national and local level, but which does not align and may even wholly conflict with the economic system in many member nations,

Noting that, despite this, WA nations, acting through resolution-defined authorities, must both enact and make known minimum standards related to this type of financial instrument,

Particularly concerned that the language used to dictate this requirement and in many other areas of the resolution are written in impenetrable jargon that calls into question the understanding of legislators who ratified the resolution, in consideration of the highly specialized knowledge, or at least a large time investment, required to fully understand the ramifications thereof,

Suggesting that this is why the resolution passed when the "redemption" clause imposes upon WA nations, through their vested authorities, duties which are inconsistent with economic systems that do not support the existence of money market funds, such as the maintenance of minimum buffers ahead of "stressed market conditions" when no such markets may even exist in the so-directed member nation,

Not believing that the proviso at the end of the resolution which leaves to member nations the privilege to decide if money market funds are honored divests them of the imposed duties described,

Moreover reaffirming that the existence of many member nations for which money market funds are wholly irrelevant advertises the target's lack of international legislative propriety,

The General Assembly hereby repeals GA#746 "Money Markets Funds Protocol."

Asserting that the province of World Assembly legislation is the governance of issues of international importance, including, but not limited to, the establishment of universal rights, the negotiation of competing member nation interests, addressing nation-level decision-making on issues that have international impact, or the promotion of international harmony and peace,

Finding that the target deals with the far more granular issue of money market funds, a specific type of financial instrument that serves as a high-risk alternative to standard banking, a topic which is not only more effectively governed at the national and local level, but which does not align and may even wholly conflict with the economic system in many member nations,

Noting that, despite this, WA nations, acting through resolution-defined authorities, must both enact and make known minimum standards related to this type of financial instrument,

Particularly concerned that the language used to dictate this requirement and in many other areas of the resolution are written in impenetrable jargon that calls into question the understanding of legislators who ratified the resolution, in consideration of the highly specialized knowledge, or at least a large time investment, required to fully understand the ramifications thereof,

Suggesting that this is why the resolution passed when the "redemption" clause imposes upon WA nations, through their vested authorities, duties which are inconsistent with economic systems that do not support the existence of money market funds, such as the enforcement of minimum buffers ahead of "stressed market conditions" when no such markets may even exist in the so-directed member nation,

Unconvinced that the proviso at the end of the resolution which leaves to member nations the privilege to decide if money market funds are sold divests them of the imposed duties described,

Moreover reaffirming that the existence of many member nations for which money market funds are wholly irrelevant advertises the target's lack of international legislative propriety,

The General Assembly hereby repeals GA#746 "Money Markets Funds Protocol."

[Second Sovereignty]

OOC:
Full support and good luck.

[Haymarket Riot]

Support.

[The Ice States]

I also support this; best of luck :D

[Elyreia]

OOC: Nuke it from orbit.

[The Overmind]

The support of all of the above is appreciated. Changes made in accordance with feedback from Imperium Anglorum and The Ice States regarding the incorrect usage of "fiscal governance" and the confusingly jargony "commute [...] with"

[Imperium Anglorum]

The support of all of the above is appreciated. Changes made in accordance with feedback from Imperium Anglorum and The Ice States regarding the incorrect usage of "fiscal governance" and the confusingly jargony "commute [...] with"

Also "incoherent with economic systems" should probably be "inconsistent with [snip]".

[The Overmind]

The support of all of the above is appreciated. Changes made in accordance with feedback from Imperium Anglorum and The Ice States regarding the incorrect usage of "fiscal governance" and the confusingly jargony "commute [...] with"

Also "incoherent with economic systems" should probably be "inconsistent with [snip]".

Believe it or not, jargon from the same field! Physics! Will correct. Thanks.

[Simone Republic]

As mentioned on the discord:

1. "Minimum buffers" are on fund level, cf clause 8(b) and clause 9(a) of the target. There's no mention on government support for the buffer, only on whether to bail out the fund itself.

2. "Fiscal governance" "and commute" are not used in the usual senses of the words as Mage and IA mentioned. And other points ditto IA above.

3. Also relevance, depending on how you read it ("not believing..." vs earlier). I'd leave that one to the Pink Brigade Sexuality-Ambiguous Boy Band.

4. "in consideration of the highly specialized knowledge, or at least a large time investment, required to fully understand the ramifications thereof" <- are you saying GA122 doesn't exist?

[The Overmind]

"Minimum buffers" are on fund level, cf clause 8(b) and clause 9(a) of the target. There's no mention on government support for the buffer, only on whether to bail out the fund itself.

When you say "on fund level" I have to assume (because I don't see how else what you reference is reflected in the repeal) that you are clarifying that the "authority" carrying out the requirements is only dictating them vis-à-vis whoever manages the fund portfolio, and implying therein that whoever manages said fund would not even exist to direct it if the fund is not sold in the member nation.

However, it is not clear from a plain-text reading of the target proposal that "[e]ach authority is to ensure that [...] minimum buffers at the fund level are imposed to meet redemption requests in stressed market conditions" does not refer to a duty of the authority to maintain such a minimum buffer. Since the "authority" is defined to be "one or more government entities designated by a WA state to enforce and interpret this resolution," a plain-text reading suggests that the minimum buffers are maintained by the member nation through such an authority, only "imposing" them inasmuch as they are imposed, as you say "on fund level."

If this is not what you are arguing, it's not clear to me what in the repeal you're referring to.

are you saying GA122 doesn't exist?

Reading and understanding an onerous text are two different things.

[The Overmind]

Repeal text edited to tighten up wording to exactly reflect the word choice in the target text, though the arguments stemming from the clauses in which these choices were made remain unchanged.

[Gates Was Right]

Launch it into the sun

[Tinhampton]

I do not mind for other people using my proposal box formatting, with or without attribution.

More substantiatively: "It's not defined!" is a NatSov argument. As of this writing, you cannot have repeals grounded purely on NatSov. What is the argument against the resolution itself?

[The Overmind]

I do not mind for other people using my proposal box formatting, with or without attribution.

More substantiatively: "It's not defined!" is a NatSov argument. As of this writing, you cannot have repeals grounded purely on NatSov. What is the argument against the resolution itself?

There actually isn't a national sovereignty argument made here, so it definitely can't be the only argument

Edit: to clarify, while it is argued that the topic makes for poor international governance, being more effectively nationally and locally governed, and that it actively interferes with how economies are governed in many member nations, it is no where argued that the problem with the resolution is that it reduces the independence of national governance (i.e. interferes with national sovereignty).

[Imperium Anglorum]

I do not mind for other people using my proposal box formatting, with or without attribution.

More substantiatively: "It's not defined!" is a NatSov argument. As of this writing, you cannot have repeals grounded purely on NatSov. What is the argument against the resolution itself?

There actually isn't a national sovereignty argument made here, so it definitely can't be the only argument

Edit: to clarify, while it is argued that the topic makes for poor international governance, being more effectively nationally and locally governed, and that it actively interferes with how economies are governed in many member nations, it is no where argued that the problem with the resolution is that it reduces the independence of national governance (i.e. interferes with national sovereignty).

I would read economic sovereignty claims to be part of traditionally "NatSov-only" argumentation: "we banned money market funds though" is a statutory enforcement that is different from "there are no such funds in this nation even though they are not illegal" (which is itself undermined by the repeal's statement that the target forces nations to recognise them).

The new relevance rule's only operative portion is really "A repeal must give at least one reason for repealing the target resolution which engages with its specific contents" what follows are examples that are recodifications of the older version of the rule's highlighting of cultural and religious sovereignty. (This is basically an extension of the presumption of nonexclusive "include"; see generally Scalia and Garner Reading law (2012) pp 132–33.)

(This post is not a ruling.)

[The Overmind]

There actually isn't a national sovereignty argument made here, so it definitely can't be the only argument

Edit: to clarify, while it is argued that the topic makes for poor international governance, being more effectively nationally and locally governed, and that it actively interferes with how economies are governed in many member nations, it is no where argued that the problem with the resolution is that it reduces the independence of national governance (i.e. interferes with national sovereignty).

I would read economic sovereignty claims to be part of traditionally "NatSov-only" argumentation: "we banned money market funds though" is a statutory enforcement that is different from "there are no such funds in this nation even though they are not illegal" (which is itself undermined by the repeal's statement that the target forces nations to recognise them).

The new relevance rule's only operative portion is really "A repeal must give at least one reason for repealing the target resolution which engages with its specific contents" what follows are examples that are recodifications of the older version of the rule's highlighting of cultural and religious sovereignty. (This is basically an extension of the presumption of nonexclusive "include"; see generally Scalia and Garner Reading law (2012) pp 132–33.)

(This post is not a ruling.)

It's more of a matter of base incompatibility with a whole class of economic systems, which is only by the thinnest stretch a national sovereignty argument in that we should broadly expect resolutions not to force entire economic systems to change in order for the resolution to make sense in the context of those nations, not legally speaking, but as a matter of good legislation.

The target impels a number of nonsense behaviors from nations it permits not to allow the sale of MMFs, which includes establishing and advertising (i.e. promulgating) minimum standards for them, and suring them against markets that might not even be in the nation itself if the MMF is bought into in another nation that does allow its sale.

Moreover, it just is too granular and niche to be appropriate for international legislation. To give an arbitrary but illustrative example, legislating the sale price of teddy bears at the international level is bad proposal material, not because it robs nations of the right of self-determination, but because where teddy bear markets exist in the first place, they're certainly not better governed by an international body than a national or local one sensitive to market conditions at that level and in the context of how nationally important teddy bears happen to be.

The target is micromanagement in the extreme, and that's what has created the ridiculous situation of having all of these guidelines in member nations to whom they are not relevant, or are even onerous, or active economic nuisances.

[Imperium Anglorum]

I would read economic sovereignty claims to be part of traditionally "NatSov-only" argumentation: "we banned money market funds though" is a statutory enforcement that is different from "there are no such funds in this nation even though they are not illegal" (which is itself undermined by the repeal's statement that the target forces nations to recognise them).

The new relevance rule's only operative portion is really "A repeal must give at least one reason for repealing the target resolution which engages with its specific contents" what follows are examples that are recodifications of the older version of the rule's highlighting of cultural and religious sovereignty. (This is basically an extension of the presumption of nonexclusive "include"; see generally Scalia and Garner Reading law (2012) pp 132–33.)

(This post is not a ruling.)

It's more of a matter of base incompatibility with a whole class of economic systems, which is only by the thinnest stretch a national sovereignty argument in that we should broadly expect resolutions not to force entire economic systems to change in order for the resolution to make sense in the context of those nations, not legally speaking, but as a matter of good legislation.

The target impels a number of nonsense behaviors from nations it permits not to allow the sale of MMFs, which includes establishing and advertising (i.e. promulgating) minimum standards for them, and suring them against markets that might even be in the nation itself if the MMF is bought into in another nation that does allow its sale.

Moreover, it just is too granular and niche to be appropriate for international legislation. To give an arbitrary but illustrative example, legislating the sale price of teddy bears at the international level is bad proposal material, not because it robs nations of the right of self-determination, but because where teddy bear markets exist in the first place, they're certainly not better governed by an international body than a national or local one sensitive to market conditions at that level and in the context of how nationally important teddy bears happen to be.

The target is micromanagement in the extreme, and that's what has created the ridiculous situation of having all of these guidelines in member nations to whom they are not relevant, or are even onerous, or active economic nuisances.

Economic sovereignty, micromanagement, etc are all forms of national sovereignty argumentation. Saying that a repeal says "my nation has no MMFs even though the target would have made us have MMFs unless we made them illegal" is not thin at all; that's a classic national sovereignty argument. But whether it is a NatSov argument or not is largely beside the point.

This might not be entirely clear given Tinhampton's initial statement, but the NatSov-only rule was relaxed: we no longer strip out all NatSov arguments and then ask what is left; we are now stripping out only NatSov arguments that are not particularised (the word used in the the original wording), ie they engage with the target. Those given here, which discuss redundancy and regulatory burden in relation to specific clauses of the target, are sufficient to do that. (This post is not a ruling.)

[The Overmind]

It's more of a matter of base incompatibility with a whole class of economic systems, which is only by the thinnest stretch a national sovereignty argument in that we should broadly expect resolutions not to force entire economic systems to change in order for the resolution to make sense in the context of those nations, not legally speaking, but as a matter of good legislation.

The target impels a number of nonsense behaviors from nations it permits not to allow the sale of MMFs, which includes establishing and advertising (i.e. promulgating) minimum standards for them, and suring them against markets that might even be in the nation itself if the MMF is bought into in another nation that does allow its sale.

Moreover, it just is too granular and niche to be appropriate for international legislation. To give an arbitrary but illustrative example, legislating the sale price of teddy bears at the international level is bad proposal material, not because it robs nations of the right of self-determination, but because where teddy bear markets exist in the first place, they're certainly not better governed by an international body than a national or local one sensitive to market conditions at that level and in the context of how nationally important teddy bears happen to be.

The target is micromanagement in the extreme, and that's what has created the ridiculous situation of having all of these guidelines in member nations to whom they are not relevant, or are even onerous, or active economic nuisances.

Economic sovereignty, micromanagement, etc are all forms of national sovereignty argumentation. Saying that a repeal says "my nation has no MMFs even though the target would have made us have MMFs unless we made them illegal" is not thin at all; that's a classic national sovereignty argument. But whether it is a NatSov argument or not is largely beside the point.

This might not be entirely clear given Tinhampton's initial statement, but the NatSov-only rule was relaxed: we no longer strip out all NatSov arguments and then ask what is left; we are now stripping out only NatSov arguments that are not particularised (the word used in the the original wording), ie they engage with the target. Those given here, which discuss redundancy and regulatory burden in relation to specific clauses of the target, are sufficient to do that. (This post is not a ruling.)

Fair enough

[The Overmind]

Reviving, since I have slightly more free time and see that there is a competing repeal thread on the forum.

Edit: the clause reading "Suggesting that this is why the resolution passed when the "redemption" clause imposes upon WA nations, through their vested authorities, duties which are inconsistent with economic systems that do not support the existence of money market funds, such as the enforcement of minimum buffers ahead of "stressed market conditions" when no such markets may even exist in the so-directed member nation," has been removed from the current draft.

[The Overmind]

This draft is now on last call with a tentative submission set for two weeks from today.

[The Overmind]

Bringing this back to the front page given its imminent submission.

[The Overmind]

Four days left on this, so bringing it back the front page again

[Simone Republic]

Moreover, it just is too granular and niche to be appropriate for international legislation. To give an arbitrary but illustrative example, legislating the sale price of teddy bears at the international level is bad proposal material, not because it robs nations of the right of self-determination, but because where teddy bear markets exist in the first place, they're certainly not better governed by an international body than a national or local one sensitive to market conditions at that level and in the context of how nationally important teddy bears happen to be.

(OOC)

(1) Teddy bears are not traded internationally - whereas a money markets fund is frequently traded across countries (granted, less so in the UK or some parts of Europe, more so for the US)

(2) You may perhaps buy only one teddy bear (or none at all), or got one as a free gift, whereas your life savings are likely to be linked to a money markets fund in some shape or form, especially if you are American. I'd grant (I think Altys said this) that in some countries like France, it is less directly linked to the average person - but still is indirectly linked to the average person indirectly via banks, since for example all four major French banks have money markets funds. (That's BNP, BPCE, CA, Société Générale, even Groupe La Banque Postale has its own funds.)

Four days left on this, so bringing it back the front page again

(OOC)

To re-use a quote from IA from another thread (with apologies to IA - the italics are his):

"Most of the protests that I've heard about the target generally have little to do with how specifically a money market fund should be organised. They mainly have to do with subsidiarity and, probably more importantly, the fact that the vast majority of the player base do not care at all about money market mutual funds (even if they are all exposed to them directly or indirectly) and do not want to think about MMMFs. I won't say that arguments for repealing the target that get sucked into low impact (probably empirically disprovable) nitpicking will lose. They may win; but it won't be because anyone is actually convinced by them."

viewtopic.php?p=42026133#p42026133

The point being that if you have a stock brokerage account (Charles Schwab, Fidelity, whatever) or a 401k or any kind of retirement savings in the US, the chances are very good that you have an investment in a money markets fund. Or if you are still in university, your university's endowment would have at least millions to (potentially) billions of dollars of it, or your student union or fraternity/sorority does, so you are exposed to it one way or another.

[The Overmind]

-snip-

The principal arguments are that:
1. this is not a target of international import, whatever its marginal impact on international commerce
2. that it is absurd in the context of many member nation economies
3. that it is written in truly terrible, impenetrable, jargon

It's also pretty weird that you are repurposing IA's argument about the weakness of a different proposal when he had the opportunity, on several occasions, to voice similar issues with this proposal, while addressing other issues he had with it, and did not.