Cash in CIUs and its impact on CIUs being treated as liquid assets

Most Collective Investment Undertakings (CIUs) will need to hold a relatively small amount of money in the form of deposits with credit institutions, as compared to total assets under management, in order to manage mismatches in the redemption and issue of units in the CIU. These deposits are required for normal prudent business operations and are not part of the underlying investment strategy of the CIU. Therefore, it could be argued that money that is held by a CIU in the form of deposits with credit institutions for the purpose of managing mismatches in the redemption and issue of units or shares in the CIU is not considered an investment under Article 416(65) of Regulation (EU) No 575/2013 (CRR), provided that the amount of money held in such deposits remains small compared to the total assets under management of the CIU and does not form part of the investment policy of the CIU. Thus, by extension, such deposits are not subject to the test for investment in liquid assets in the first sub-paragraph of Article 416(1) of CRR. These deposits should be excluded from the liquid assets reported under the look-through approach of Article 418 (3) of CRR.