ESMA · ESMA_QA_1139 Answer Published
KIID Collateral management
- Regulation
- Undertakings for Collective Investment in Transferable Securities Directive (UCITS) Directive 2009/65/EC
- Topic
- UCITS eligible assets and investment restrictions
- Submitted
- 2016-10-01
- Answered
- 2016-10-01
Question
Paragraph 43(e) refers to “a basket of collateral with a maximum exposure to a given issuer of 20% of its net asset value”. Does this diversification requirement refer to the basket of collateral or to the net asset value of the UCITS?
Answer
[ESMA 34-43-392 UCITS Q&A, section 3, Q&A 6f] The diversification refers to the net asset value of the UCITS. Therefore, collateral received should be diversified so that exposure to any issuer does not exceed 20% of the net asset value of the UCITS. This means that where the amount of collateral received by a UCITS does not exceed 20% of its net asset value, the collateral can be issued by a single issuer.
This Q&A is published by European Securities and Markets Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.
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