ESMA Proposes Look-Through For UCITS Investments

ESMA, the EU securities regulator, has recommended to the European Commission that a look-through approach should be applied to all proposed UCITS investments to determine the eligibility of the relevant assets. ESMA has also proposed that UCITS should be permitted to gain indirect exposures of up to 10% to alternative assets.

The list of eligible assets for undertakings for collective investment in transferable securities ("UCITS") is set out in the Level 1 UCITS Directive. The UCITS Eligible Assets Directive ("EAD") was adopted in 2007 to assist national competent authorities ("NCAs") and market participants to develop a common understanding of the eligibility of assets under the UCITS framework. In June 2023, the European Commission ("Commission") issued a formal request to the European Securities and Markets Authority ("ESMA") to provide technical advice on the review of the EAD with a view to ensuring that the eligibility requirements are implemented in a