ESMA_QA_1135

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1135

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Regulatory Context

Regulation : UCITS

Level 1 Regulation: Undertakings for Collective Investment in Transferable Securities Directive (UCITS) Directive 2009/65/EC

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Disclosures

Subject Matter: KIID Collateral management

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Question

Submission Date: 01 October 2016

Should re-invested cash collateral comply with the 20% issuer limit of paragraph 43 (e)?

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ESMA Answer

Answer Date: 01-10-2016

[ESMA 34-43-392 UCITS Q&A, section 3, Q&A 6b] Yes. According to paragraph 44 of the guidelines, re-invested cash collateral should be diversified in accordance with the diversification requirements applicable to non-cash collateral. This means that the 20% issuer limit applies to:

entities prescribed in Article 50(f) of the UCITS Directive at which UCITS may place cash collateral; high-quality government bonds and Short-Term Money Market Funds in which cash collateral may be reinvested;

If UCITS reinvest cash collateral in reverse repo transactions, the reverse repo transactions should comply with sections X and XII of the guidelines on efficient portfolio management techniques and collateral management.

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This document was automatically extracted from the ESMA EMIR Q&A database.