ESMA Clarifies UCITS’ Permissible Investments Within 10 Percent Limit

The European Union’s European Securities and Markets Authority (“ESMA”) issued an opinion dated November 20, 2012 (the “Opinion”) in the context of the ability of undertakings for collective investment in transferable securities (“UCITS”) to invest up to 10 percent of their net assets in transferable securities and money market instruments other than those traded on a regulated market, as referred to in Article 50(1) of the EU UCITS Directive.

ESMA issued the Opinion on the basis that questions had emerged about the correct interpretation of the 10 percent derogation, and whether it includes investments in collective investment undertakings.

In order ...