Citation, commencement and application

1. —(1) These Regulations may be cited as the Local Authorities (Capital Finance and Approved Investments) (Amendment) (England) Regulations 2002 and shall come into force on 1st April 2002.

(2) These regulations apply only in relation to local authorities in England.

Amendment of the Local Authorities (Capital Finance) (Approved Investments) Regulations 1990

2. —(1)The Local Authorities (Capital Finance) (Approved Investments) Regulations 1990( 2 ) shall be amended as follows.

(2) In regulation 1(2) (interpretation), after the definition of “gilt-edged securities” there shall be inserted the following definitions—

• “ “highest possible credit rating” means, in relation to a money market fund, that it has the highest possible rating—

  (a)

  in respect of creditworthiness assigned by Standard and Poor's, a division of The McGraw-Hill Companies Ltd ( 3 ) ; or

  (b)

  in respect of both creditworthiness and volatility assigned by either Moody’s Investors Service Ltd ( 4 ) or Fitch Ratings Ltd ( 5 ) ;

• “money market fund” means a collective investment scheme which—

  (a)

  in accordance with the Council Directive of 20th December 1985 on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investments in transferable securities as amended ( 6 ) , is an undertaking for collective investment in transferable securities subject to that Directive;

  (b)

  has been given the highest possible credit rating; and

  (c)

  is either a unit trust scheme authorised under section 243 of the Financial Services and Markets Act 2000 ( 7 ) or a collective investment scheme recognised under section 264 of that Act; ” .

(3) In regulation 2(1) (approved investments)—

(a) in sub-paragraph (b), after “deposit taker” there shall be added “, the Treasury”; and

(b) after sub-paragraph (b), there shall be inserted the following sub-paragraph—

“ (bb) any investment in a money market fund; ” .

(4) In regulation 3 (conditions for approval of investments) in paragraphs (1)(c) and (4)(a), after “regulation 2” there shall be inserted “(1)”.

Amendment of the Local Authorities (Capital Finance) Regulations 1997

3. —(1)The Local Authorities (Capital Finance) Regulations 1997( 8 ) shall be amended as follows.

(2) In regulation 62(b) (disposal of investments)—

(a) for “2(b) or (c)” there shall be substituted “2(1)(b), (bb) or (c)”;

(b) in sub-paragraph (i), for the word “institution” wherever it appears there shall be substituted “deposit taker”;

(c) in sub-paragraph (ii)—

(i) after “2”, there shall be inserted “(1)”; and

(ii) at the end there shall be added “; or”; and

(d) after sub-paragraph (ii) there shall be added the following sub-paragraph—

“ (iii) where the investment was made with a money market fund, that fund has ceased to be a money market fund within the meaning given to that expression in regulation 1(2) of the 1990 Regulations. ” .