ESMA_QA_1171

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1171

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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 Financial indices

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Question

Submission Date: 24 March 2014

Paragraph 61 of the guidelines recommends that financial indices in which UCITS invest should be subject to independent valuation. Does this mean that UCITS should not invest in financial indices for which the valuation is performed by the index provider itself?

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ESMA Answer

Answer Date: 24-03-2014

[ESMA 34-43-392 UCITS Q&A, section 3, Q&A 7h] No. If the valuation is performed by an entity independent from the index provider, the criterion of independent valuation is considered to be fulfilled. However, UCITS can invest in financial indices for which the valuation is performed by the index provider, insofar as the unit in charge of the valuation of the index is functionally independent from the unit responsible for the design of the index and the UCITS itself carries out its own due diligence. Also, the remuneration of the staff responsible for the valuation of the index should not be linked to the performance of the financial index.

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