ISLA responds to ESMA’s consultation document “Revision of the provisions on diversification of collateral in ESMA’s guidelines on ETFs and other UCITS”.
ISLA has submitted a response to ESMA’s consultation on proposals to amend the collateral diversification rules contained in its guidelines for ETFs and other UCITS. The current guidelines require that no more than 20% of the NAV of a UCITS may be held in collateral from any one issuer. In the consultation ESMA consider allowing a derogation from this provision for government issued collateral in certain circumstances. The proposal is that this derogation should be limited to money market fund UCITS only to allow them to use higher volumes of reverse repo against a single government issuer.
ISLA argues that whilst it supports the proposal, the derogation should be available to all UCITS (not just MMFs). A copy of ISLA’s response can be found here.
Draft EU regulation on reporting and transparency of SFTs – Clifford Chance Briefing
Further to our announcement last month you may be interested to read a briefing note from Clifford Chance on this development. The briefing note can be accessed here.
We are pleased to announce that following the recent bye-election Arne Theia from Unicredit Bank has been elected to the ISLA Board.
Law Commission: CP 215: FIDUCIARY DUTIES OF INVESTMENT INTERMEDIARIES
ISLA has submitted a response to the UK Law Commission's consultation paper CP 215: FIDUCIARY DUTIES OF INVESTMENT INTERMEDIARIES. The paper is a follow up to the Kay Review to which ISLA previously responded and asks whether the FCA should consider further regulation of the securities lending activity of custodians (particularly in relation to the payment of fees). ISLA argues that existing FCA regulation in this area (alongside the more recent Guidelines for UCITS issued by ESMA) is sufficient for dealing with any concerns. The consultation paper can be found here and ISLA's response here.