UCITS Share Classes – Recent ESMA Opinion


Author: Kevin Murphy, Sarah Cunniff, Dara Harrington and Adrian Mulryan

On 30 January 2017 ESMA published its long-awaited opinion on UCITS share classes. The opinion follows its consideration of responses to the second consultation of April 2016 and provides ESMA’s final opinion on the nature of share classes and the establishment of a regulatory framework comprising a set of high-level principles and certain operational principles with which all UCITS share classes should comply. A copy of the opinion can be downloaded from: ESMA Share Class Opinion.

It should be noted that ESMA has confirmed that hedging arrangements at the share class level with overlays that are not linked to currency (such as interest rate risk, duration risk or volatility risk hedged share classes) are not compatible with the high-level principles and these should be set up as separate funds.

The opinion is addressed to the national regulators and we would expect the Central Bank of Ireland to confirm that it will require UCITS to comply with the requirements set out in the opinion.

Read the full briefing here.

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