The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today publishes a Call for Evidence on the review of the Undertakings for Collective Investment in Transferable Securities (UCITS) Eligible Assets Directive (EAD). The objective of this call is to gather information from stakeholders to assess possible risk and benefits of UCITS gaining exposure to various asset classes.

Investors and consumer groups interested in retail investment products, management companies of UCITS, self-managed UCITS investment companies, depositaries of UCITS and trade associations are invited to provide their feedback on market practices and interpretation or practical application issues with respect to the eligibility criteria and other provisions set out in the UCITS EAD.

ESMA is additionally interested in gathering insights on some key notions and definitions used in the UCITS EAD and their transversal consistency with other pieces of legislation in the EU Single Rulebook.

Importance of the UCITS EAD review
UCITS are the key retail investment product in the EU, accounting for around 75% of all collective investments by retail investors. The acclaimed success of UCITS as a global brand is based on their established reputation of being well-regulated and supervised investment products. Most notably, UCITS shall be invested in assets subject to stringent eligibility criteria with a view to ensuring adherence to the investor protection principles underlying the UCITS Directive.

Since the adoption of the UCITS EAD almost two decades ago, the number and variety of financial instruments traded on financial markets has increased considerably, leading to uncertainty in determining whether some categories of assets are eligible for investment, in turn giving rise to divergent interpretations and market practices in terms of the application of the UCITS Directive.

ESMA’s technical advice on the review of the UCITS EAD therefore aims to preserve and strengthen the well-functioning of the UCITS framework and the operation of UCITS in the best interest of investors, as well as the quality of investment products offered to retail investors.