The European Securities and Markets Authority (ESMA) has today closed its Call for Evidence (CfE) on the review of the UCITS Eligible Assets Directive (EAD).

The CfE was published in May. It followed a request from the European Commission (EC) to ESMA for technical advice on its review of the EAD. The EC in particular want ESMA to identify divergent approaches in different EU member states and to make recommendations on how to align the EAD with developments in the market since it was first published in 2007.

The CfE sought input from a variety of stakeholders on far reaching issues on the EAD, including the way in which UCITS may have gained direct and indirect exposures to asset classes such as structured loans, crypto assets, emission allowances and catastrophe bonds. In this connection, ESMA asked for views on whether a look-through approach could address the risks and benefits of UCITS gaining indirect exposure to asset classes that are not directly investible. It also sought insights on the notion of “liquidity”, which is a frequently used term in the UCITS Directive and EAD, but which is not given a specific definition. The CfE also asked for views on perceived over-reliance on the presumption of liquidity and negotiability set out in the EAD.

ESMA will now assess feedback it has received to date and take it into account as it develops its technical advice for the Commission.