The European Securities and Markets Authority (ESMA) has published an opinion on the impact of EMIR on UCITS. The opinion is addressed to the EU institutions.

In its opinion ESMA calls for a modification of articles 50(1)(g)(iii) and 52 of the UCITS Directive to take into account the clearing obligation of certain types of over-the-counter (OTC) financial derivative transactions required by EMIR.

In particular, ESMA believes that the UCITS Directive should no longer distinguish between OTC financial derivative transactions and exchange-traded derivatives (ETDs). Instead, the distinction should be between cleared financial derivative transactions and non-cleared financial derivative transactions. ESMA states that this would have the merit of treating ETDs and cleared OTC financial derivative transactions which display similar characteristics in terms of counterparty risk in the same manner.

As for OTC financial derivative transactions that are not centrally cleared, ESMA is of the view that there is no need to modify the UCITS Directive and that the current counterparty risk limits of article 52 of the UCITS Directive should continue to apply.

View ESMA calls for modification of UCITS Directive, 22 May 2015