ESMA Consultation Paper Entitled "ESMA’s Guidelines On ETFs And Other UCITS Issues"

On 30 January 2012 ESMA published a consultation paper which sets out ESMA's proposed guidelines on UCITS ETFs, index-tracking UCITS, efficient portfolio management techniques, total return swaps and strategy indices for UCITS. ESMA has requested responses to the consultation paper from interested parties in advance of the adoption of the finalised guidelines in the second quarter of 2012. A summary of the proposed guidelines follows.

Index-tracking UCITS and index-tracking leveraged UCITS

The prospectus must include a clear description of the index including details of its underlying components (the prospectus can direct investors to a website where the exact composition is published), information on how the index will be tracked, details of investor exposure to counterparty risk and a description of the factors that are likely to affect the UCITS' ability to track the performance of the index. Details of whether the index-tracking UCITS will follow a full