The European Securities and Markets Authority ("ESMA")
has published an opinion (the "Opinion") on Article 50
(2)(a) of the UCITS Directive (2009/65 EC) (the
"Article") following questions that surround the
interpretation of the Article.
The Article provides that a UCITS shall not invest more than 10%
of its assets in transferable securities or money market
instruments other than those referred to in Article 50(1).
ESMA's opinion states the following:
- the Article concerns investments in transferable securities and money market instruments and does not refer to units or shares of collective investment undertakings; and
- the Article allows for a derogation from sub-paragraphs (a) to (d) and (h) but not from (e).
Some interpretations of this article provided that Collective Investment Schemes such as ETFs might fall within its scope. However, ESMA opines that UCITS may only invest in units or shares of collective investment undertakings as defined in Article 50(1)(e). The Central Bank of Ireland has now advised that it requires Irish UCITS to comply with the interpretation of Article 50 (2)(a) as set out in the Opinion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
