ESMA finalises guidelines on repurchase and reverse repurchase arrangements for UCITS.

On 4 December 2012 the European Securities and Markets Authority (ESMA) published its final guidelines 2012/722 on repurchase and reverse repurchase agreements for UCITS. These guidelines follow the consultation published in the ESMA Report and Consultation Paper 2012/474 on the "recallability" of repo and reverse repo agreements published on 25 July this year and including the Guidelines on ETFs and other UCITS issues. 

In summary, the guidelines provide that UCITS should enter into repurchase and reverse repurchase agreements on terms that allow the UCITS to recall any assets or the full amount of cash, or terminate the agreements, at any time. Fixed-term agreements that do not exceed seven days are considered as meeting this "recallability" criteria. 

In its press release, ESMA confirmed that the guidelines will now be translated into all EU languages and will be incorporated into ESMA’s Guidelines on ETFs and other UCITS issues. The full set of guidelines will become applicable two months after the publication of the translations on the ESMA website and all UCITS created after such date shall comply with the guidelines. The Guidelines comprise a number of grand-fathering provisions. In general, UCITS that exist before the application date of the guidelines should align their investments with the guidelines within 12 months of the application date of the Guidelines but certain guidelines may need to be applied earlier or immediately. 

The Guidelines on repo arrangements for UCITS funds (ref ESMA/2012/722) are available on ESMA's website. 

The Report and Consultation Paper (ref. ESMA/2012/474) is available on ESMA’s website.