A Qualifying Money Market Fund (QMMF) is a type of investment, and is one of the safest places you can put your money to work. When a financial company collects money from customers, it has to hold it either with:
A Central Bank
Α Credit Institution
A Bank authorised in a third country
Α Qualifying Money Market Fund (QMMF).
FCA identified QMMFS among the 4 safetst places to hold your cash. The safety of a QMMF is driven by a few factors. The investments of a QMMF include mainly short, fixed term deposits and short-term government issued securities. In addition, MMFs need to have certain characteristics to be considered "Qualifying":
The MMF’s primary objective must be to preserve capital
The MMF has to follow strict rules around only making investments in high quality instruments to keep risk low
It must offer investors the ability to withdraw their money very quickly (i.e. same or next day)
Given these characteristics of a QMMF, many banks and other financial companies hold user deposits, and other funds in QMMFs.