ESMA_QA_1136

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1136

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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: UCITS eligible assets and investment restrictions

Subject Matter: KIID Collateral management

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Question

Submission Date: 01 October 2016

Which types of asset do not comply with the requirement of correlation of paragraph 43 (d) of the guidelines?

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ESMA Answer

Answer Date: 01-10-2016

[ESMA 34-43-392 UCITS Q&A, section 3, Q&A 6c] According to paragraph 43 (d) of the guidelines, collateral received by the UCITS should be issued by an entity that is independent from the counterparty and is expected not to display a high correlation with the performance of the counterparty. Therefore, collateral issued or guaranteed by the counterparty of an OTC financial derivative transaction or EPM technique or by one of its subsidiaries or by a parent company, or more generally by an entity belonging to the same issuer group should not be considered compliant with paragraph 40 (d) of the guidelines.

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