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August 21, 2014

European Securities and Markets Authority (ESMA) Issues Guidelines on Repo Arrangements for UCITS Funds

On December 4, the European Securities and Markets Authority (ESMA) published final guidelines on repurchase and reverse repurchase agreements for UCITS funds established under the Undertakings for Collective Investment in Securities Directives.

Under the guidelines:

  • for repurchase arrangements, UCITS funds should be able to recall at any time the assets subject to such arrangements; and
     
  • for reverse repurchase agreements, UCITS funds should be able to recall at any time the full amount of cash on either an accrued or a mark-to-market basis. However, when cash is recalled on a mark-to-market basis, the mark-to-market value of the reverse repurchase agreements should be used for the calculation of the net asset value of the UCITS.

The repo guidelines will be incorporated into ESMA’s Guidelines on exchange-traded funds and other UCITS issues, published in July 2012 (as reported in the July 27, 2012, edition of Corporate and Financial Weekly Digest).

The guidelines will come into force on a date to be announced, which will be two months after the publication of translations of the Guidelines into all EU official languages on ESMA’s website.

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©2014 Katten Muchin Rosenman LLP

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About this Author

Partner

Edward Black, a partner in Katten Muchin Rosenman UK LLP, has a wide range of funds and financial services experience. He has acted for securities, commodities and derivatives brokers and dealers, banks, investment banks and investment managers for over 20 years. This has led to substantial involvement in commercial and transactional work in the financial services field as well as extensive regulatory expertise, and to significant experience with employment law matters.

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