In December 2012, the European Securities and Markets Authority (“ESMA”) published its guidelines on Exchange-Traded Funds (“ETFs”) and other Undertaking for Collective Investment in Transferable Securities (“UCITS”) issues (the “Guidelines”) (ESMA/2012/832).

Stakeholders requested ESMA several times to change its position on the requirements on the collateral diversification as detailed under article 43(e) of these Guidelines as those requirements were considered to have an adverse impact on the UCITS’ collateral management policies.

On 20 December 2013, ESMA published a Consultation Paper proposing amendments to such article 43(e) (ESMA/2013/1974) accordingly. Annex I of the Final Report issued by ESMA and dated 24 March 2014 now sets out ESMA's position on the collateral management by UCITS. The revised provisions are now under the review of the Member States and those will have a two month period to notify ESMA whether they comply/intend to comply with such revised provisions respectively guidelines.

On the same date, i.e. 24 March 2014, ESMA published an updated version of the related Questions & Answers giving further clarifications to the Guidelines and more precisely to financial indices.

The updated version of the two documents issued by ESMA can be found here.