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ARTICLE · 23 FEBRUARY 2018

Benchmark Regulation: Update

ELVINGER HOSS PRUSSEN, société anonyme
Explore more from ELVINGER HOSS PRUSSEN, société anonyme

In the latest update of its Q&A on the application of the Benchmark Regulation , ESMA clarifies the concept of "use of a benchmark" by investment funds.

European UnionFinance and Banking
Elvinger Hoss Prussen
Elvinger Hoss Prussen

In the latest update of its Q&A on the application of the Benchmark Regulation, ESMA clarifies the concept of "use of a benchmark" by investment funds. In particular, Q&A 5.4. clarifies that ESMA considers that an index is used for the purpose of defining the investment fund's asset allocation only if the investment policy or investment strategy described in the investment fund documentation define constraints on the asset allocation of the investment fund's portfolio in relation to the index. In addition, Q&A 5.5. clarifies that the mere mentioning of indices in the investment fund documentation for performance measurement purposes (without any asset allocation constraint), is not considered as being "the use of a benchmark" within the meaning of the Benchmark Regulation and is therefore out of scope.

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