ESMA publishes technical advice on eligible assets for UCITS

The European Securities and Markets Authority (ESMA) has published its final technical advice to the European Commission (EC) on the review of the UCITS Eligible Assets Directive (EAD) accompanied by a press release. The EAD clarifies the types of assets in which UCITS funds may invest. ESMA's advice assesses how the EAD has been implemented across jurisdictions and sets out a range of proposals to overcome divergent practices by national regulators and markets. Central to ESMA's recommendations is the adoption of a look-through approach to assess asset eligibility for at least 90% of a UCITS portfolio. ESMA also proposes allowing up to 10% indirect exposures to alternative assets, subject to strict regulatory safeguards. The EC is expected to consider ESMA's advice in its review of the UCITS EAD framework.

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