In relation to the Undertakings for Collective Investment in Transferable Securities (“UCITS”) Directive, the European Securities and Markets Authority (“ESMA”) has published Questions and Answers (“Q&A”) papers on (i) Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS and (ii) Notification of UCITS and exchange of information between competent authorities.  

The aim of the Q&As is to provide responses to questions in relation to the practical application of the UCITS framework. While the Q&As will assist UCITS management by clarifying the position, they are also targeted at competent authorities to ensure that their actions, within their supervisory activities, coincide with the responses provided by ESMA.

  1. Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS

The paper provides Q&As in respect of the following 4 topics:

  • hedging strategies;
  • disclosure of leverage by UCITS;
  • concentration rules; and
  • calculation of global exposure for fund of funds.
  1. Notification of UCITS and exchange of information between competent authorities.

The paper provides Q&As in respect of the following topics:

  • notification of new investment compartments;
  • amendments and updates of documents referred to in Article 93(2) of Directive 2009/65/EC;
  • access to documents by UCITS host Member State’s;
  • notification letters;
  • exchange of information between competent authorities in the context of establishment of a branch of a UCITS management company; and
  • attestation of payment of notification fees.  

ESMA has also published a Q&A on prospectuses with a view to identifying if there is a need to convert some of the pertinent information derived from the Q&As into ESMA guidelines and recommendations.  

Numerous topics are targeted. Examples of such include:

  • information from issuers to host competent authorities;
  • publication of notices;
  • publication of prospectuses;
  • incorporation by references;
  • risk factors;
  • rights issues;
  • pro forma financial information; and
  • references to credit ratings.  

The links to the Q&As can be found here:

  1. http://www.esma.europa.eu/system/files/2012-429.pdf
  2. http://www.esma.europa.eu/system/files/2012-428.pdf
  3. http://www.esma.europa.eu/system/files/2012-417.pdf