On 26 June 2025, the European Securities and Markets Authority (ESMA) published a Final Report containing technical advice to the European Commission (Commission) on the review of the UCITS Eligible Assets Directive (UCITS EAD).

Background

Following a mandate from the Commission to provide technical advice on the review of the UCITS EAD, ESMA carried out a survey of Member State competent authorities (NCAs) and issued a Call for Evidence to gather insights and data. The consultation period on the Call for Evidence closed on 7 August 2024 and ESMA received 63 responses. A summary of the feedback received to the Call for Evidence is set out in Annex II of the Final Report.

Technical advice

ESMA’s technical advice provides policy proposals on a variety of issues and are intended to overcome divergent NCA and market practices. Sections 4 to 17 of the Final Report cover the key aspects on which the Commission requested technical advice and ESMA’s respective policy assessments in light of stakeholder feedback and the feedback gathered from NCAs. Annex VI of the Final Report contains proposals to the Commission on how the legal texts could be revised to reflect the policy recommendations.

A central element of the technical advice is the application of a look-through approach as a fundamental criterion for determining the eligibility of asset classes for at least 90 per cent of the UCITS portfolio. Allowing a certain degree of flexibility, the technical advice also proposes to permit indirect exposures to alternative assets up to 10 per cent (subject to regulatory safeguards, for example on liquidity and valuation) with a view to improving risk diversification and generating returns from uncorrelated asset classes.

Next steps

ESMA expects the Commission to take the technical advice into account as it reviews the UCITS EAD.