The European Securities and Markets Authority (ESMA) has published its final technical advice to the European Commission (EC) on the
review of the UCITS Eligible Assets Directive (EAD) accompanied by a
press release. The EAD clarifies the types of assets in which UCITS funds may invest. ESMA's advice assesses how the EAD has been implemented across jurisdictions and sets out a range of proposals to overcome divergent practices by national regulators and markets. Central to ESMA's recommendations is the adoption of a look-through approach to assess asset eligibility for at least 90% of a UCITS portfolio. ESMA also proposes allowing up to 10% indirect exposures to alternative assets, subject to strict regulatory safeguards. The EC is expected to consider ESMA's advice in its review of the UCITS EAD framework.
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