The IMA this week responded to ESMA’s paper on guidelines for UCITS ETFs and Structured UCITS, in which they propose applying greater regulation, by questPARA_BREAK_SENTINEL_9f8e7d6c

The IMA this week responded to ESMA’s paper on guidelines for UCITS ETFs and Structured UCITS, in which they propose applying greater regulation, by questioning ESMA’s rationale: Specifically on why they felt it necessary to single out certain types of UCITS products at the exclusion of others such as non-UCITS Exchange-Traded products. Julie Patterson (pictured), IMA Director, said in a written statement that UCITS are already “subject to detailed regulation” and that regulatory intervention should only happen “when there is a clear market failure, but we see no evidence of this”. Patterson pointed out that the IMA agreed with ESMA’s proposed approach to give investors greater clarity via the KIID document and improve disclosures but added: “We need national regulators to adopt consistent implementation and to enforce the UCITS rules.”

She believes that if certain areas of the UCITS product rules need to be reviewed then it needs to be done with consistency and all apply to all retail investment products. “The European Commission’s PRIPs initiative seeks to achieve just that, but we are concerned that it is being treated with lower priority than it warrants,” said Patterson. Areas of concern identified by ESMA in UCITS ETFs include index-tracking issues and what the type and quality of collateral being received actually is. They also believe that swap counterparties engaged in total return swaps in structured UCITS should be subject to specific safeguards.