ESMA guidelines on ETFs and other UCITS: what they mean for managers
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UCITS, the 'Undertakings for Collective Investment in Transferable Securities', are a set of European directives that impose a common framework for regulating collective investment schemes throughout the European Union. If an investor purchased the shares via a broker, they will exchange traded commodities ucits eligible to request that the broker redeems directly on behalf of the investor.
The assets of a UCITS fund must be entrusted to an independent custodian for safekeeping, segregated from the assets of that custodian and the company that issued the ETF. These assets cannot be used to discharge the liabilities of either the custodian or the fund issuer.
Furthermore, the UCITS regulations oblige the fund to reduce its exposure to any counterparties in case such counterparties default on their obligations under the derivative contracts. One way of doing this is to post collateral.
This collateral should meet minimum criteria. For example, the collateral must be valued on at least a daily basis and assets that exhibit high price volatility should not be accepted unless suitably conservative haircuts have been applied. The amount of information required in the prospectus will vary according to the type of ETF. Since prospectuses can be extremely long and dense documents, the KIID is a plain and concise summary of the important facts about the ETF. Usually, it is limited to two A4 pages in length.
However, it should be noted that the KIID will inevitably omit certain information and investors should always read the full prospectus. Finally, the annual and semi-annual reports will provide details of the investments and performance. It will include commentary from the fund issuer about developments over the financial year. Select your region, country and investor type and discover the right products and information for you. Selected country and investor is invalid. Please return to Home page.
Oil and energy ETPs. Active and passive investment What is exchange traded commodities ucits eligible ETP? Why use an ETP? Internal costs External costs Beyond TER Tracking Tracking error and tracking difference Causes of tracking error and difference Importance of tracking error and difference Understanding indices Futures, contango and backwardation Futures Understanding futures indices Impact of contango and backwardation.
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