Consultation on the treatment of repurchase and reverse repurchase agreements

ESMA is seeking views on the appropriate treatment of repo and reverse repo arrangements in the context of the guidelines on ETFs and other UCITS issues.
This consultation paper sets out ESMA’s proposal for the treatment of repo and reverse repo arrange-ments. ESMA proposes a distinct regime for repo and reverse repo arrangements which, unlike for securities lending arrangements, would allow a proportion of the assets of the UCITS to be non-recallable at any time at the initiative of the UCITS. The proposed guidelines include safeguards to ensure that the counterparty risk arising from these arrangements is limited and that UCITS entering into such arrangements can continue to execute redemption requests.
ESMA will take into account the responses to this consultation in developing the final policy approach on repo and reverse repo transactions. That policy approach will be integrated into the remainder of the guidelines on ETFs and other UCITS issues, which are set out in Annex III of the paper.