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24 March 2014

ESMA publishes Final Report and Q&A on revision of Guidelines ETFs and other UCITS issues

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Annex I of this final report sets out ESMA's position on collateral management by UCITS. The guidelines in Annex I modify the rules on collateral diversification in paragraph 43(e) of the existing guidelines and introduce some further consequential changes.

The revised Undertakings for Collective Investment in Transferable Securities (UCITS) Directive puts in place a comprehensive framework for the regulation of harmonised investment funds within Europe. The extensive requirements with which UCITS must comply are designed to ensure that these products can be sold on a cross-border basis. The Directive of 2009 also introduced a management company passport.

The UCITS framework is made up of the following EU legislation:

  • Directive 2009/65/EC, which was adopted in 2009. It is a ‘framework’ Level 1 Directive which has been supplemented by technical implementing measures.
  • Directive 2007/16/EC; Directive 2010/43/EU; Regulation No 583/2010; Directive 2010/42/EU; and Regulation No 584/2010.

ESMA is required to play an active role in building a common supervisory culture by promoting common supervisory approaches and practices. In this regard, the Authority develops Q&As as and when appropriate to elaborate on the provisions of certain EU legislation or ESMA guidelines.

The purpose of this document is to promote common supervisory approaches and practices in the application of the UCITS Directive and its implementing measures, with a specific focus on the guidelines on ETFs and other UCITS issues (ESMA/2012/832). It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of those guidelines.

The content of this document is aimed at competent authorities under UCITS to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. However, the answers are also intended to help UCITS management companies by providing clarity as to the content of the UCITS rules, rather than creating an extra layer of requirements.

The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices under Article 29(2) of the ESMA Regulation.

Therefore, due to the nature of Q&As, formal consultation on the draft answers is considered unnecessary. However, even if they are not formally consulted on, ESMA may check them with representatives of ESMA’s Securities and Markets Stakeholder Group, the relevant Standing Committees’ Consultative Working Group or, where specific expertise is needed, with other external parties.

ESMA will review these questions and answers on a regular basis to identify if, in a certain area, there is a need to convert some of the material into ESMA guidelines. In such cases, the procedures foreseen under Article 16 of the ESMA Regulation will be followed.

This document is intended to be continually edited and updated as and when new questions are received. The date each question was last amended is included after each question for ease of reference.

Final report



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