UCITS and the use of leverage, July 2012


On 9 July 2012 ESMA issued a question and answers document1 in relation to its risk measurement guidelines for UCITS2. The Q&A document is intended to address the divergent approaches which had developed across the EU on particular issues and seeks to ensure that a common supervisory approach and common practices are followed throughout the EU. In response to the issue of the ESMA Q&A the Central Bank has issued a letter to the Irish funds industry addressing its requirements where leverage is used by UCITS. The purpose of this client briefing is to explain the Central Bank’s requirements on the calculation of leverage and the disclosure required in a UCITS prospectus relating to leverage.

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