European Securities and Markets Authority (ESMA) have released their Final Report on the UCITS Eligible Assets Directive, which will feed into the European Commission’s upcoming review.
While the report covers a broad range of topics related to European UCITS, of particular interest to our members is the reference to the deployment of collateral.
The report signals ESMAs support for further clarification and harmonisation of ‘eligible’ collateral arrangements, with the report stating that “ESMA sees merit in assessing the opportunity to amend the UCITS Directive to allow for the deployment of ‘other collateral arrangements’”. The report goes on to make direct reference to the use of pledge as a widespread and industry supported practice.
This support from ESMA is a positive first step and ISLA will now look to engage directly with the European Commission to ensure that this request is considered an important part of the Commission’s review. This policy proposal was an integral aspect of ISLA’s 2024 Manifesto which outlines key recommendations to boost EU Capital Markets and unlock UCITS supply.
We are grateful for the support of our members who assisted with our initial response to ESMA’s UCITS Call for Evidence, and we look forward to continued collaboration with the industry on this important development. Members can support our work by joining our Regulatory Steering Group here.
“ISLA is delighted by ESMA’s suggestion to clarify and broaden the scope of eligible collateral arrangements for UCITS funds.” – Farrah Mahmood, Director of Regulatory Affairs (ISLA)
Securities Finance Times coverage of this announcement is available here.
The full ESMA response can be found here.
