In keeping in its mission to enhance protection to investors and reinforce stable and well-functioning financial markets in the European Union, on the 4th December 2012, the European Securities and Markets Authority (ESMA) published its final guidelines on repurchase and reverse repurchase agreements for UCITS funds following a consultation period.
The guidelines state that UCITS funds should only enter into repo agreements if they are able to recall the assets at any time, while those that are engaged in reverse repo agreements, if they able to recall the full amount of cash at any time on either an accrued or mark-to-market basis.
The guidelines will be incorporated into ESMA’s Guidelines on ETFs and other UCITS issues, published in July 2012 one they are translated into all EU languages. In a statement ESMA said that “The full set of guidelines will enter into force two months after the publication of the translations. This will result in a comprehensive framework for UCITS that will increase transparency and investor protection and contributes to safeguarding the stability of financial markets.”
For more information about registering a UCITS compliant fund in Malta, please contact GVZH Advocates here.