EUROPE: ESMA Invites Consultation on the Treatment of Repos and Reverse Repos

Wednesday July 25 2012

Funds-Axis would like to highlight the recent publication of a consultation paper by ESMA outlining its invitation to the industry to consult on the treatment of Repos and Reverse Repos (Annex IV of the Paper). A link to the consultation paper can be found below;

ESMA Consultation on the Treatment of Repos & Reverse Repos

The parties who should engage with this consultation include Asset Managers and their Trade Associations and Investors (Professional and Retail) and their relevant Trade Associations.

Anyone wishing to enter a submission or opinion to ESMA in relation to the consultation on the Treatment of Repos and Reverse Reports must do so by the 25 September 2012. All submissions must be entered on to the following website, www.esma.europa.eu under the heading “your input consultations”.

HIGH LEVEL OVERVIEW

In this Consultation Paper released by ESMA on the treatment of repos and reverse repos, ESMA wishes to engage with the industry, market participants and other interested parties on the such instruments ought to be treated on a go forward basis to facilitate the better protection of investors.

One area in particular that ESMA wishes to explore in further detail and garner further opinion upon is the proportion of its assets that a UCITS scheme can place under arrangements where the UCITS cannot recall securities, in other words, the proportion of assets that the scheme would not be able to recall immediately if it terminated the repo or reverse repo at short notice to the counterparty concerned.

Should you wish to contact the author of this article to discuss any queries that the above may have prompted, then please don’t hesitate to do so at info@funds-axis.com