The European Securities and Markets Authority (ESMA) has published a Consultation Paper on revising provisions on diversification of collateral in its guidelines on exchange traded funds (ETFs) and other UCITS issues.
The Consultation Paper states that ESMA has been asked by stakeholders on numerous occasions to reconsider its position on the requirements on collateral diversification (paragraph 43(e) of the guidelines) on the basis that they have a significant adverse impact on UCITS’ collateral management policies. Stakeholders have drawn particular attention to the consequences for money market funds that place cash into reverse repurchase agreements.
The deadline for responding to the Consultation Paper is 31 January 2014. Thereafter, the EBA aims to adopt revised guidelines in Q1 2014.