Template:Ucits and reuse

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Financial instruments held in custody for a UCITS V fund must be segregated, clearly identifiable in the custodian’s books and records as belonging to the UCITS and critically the depositary (or its delegate[1]) may not rehypothecate those assets for its own account.[2]

A UCITS can “re-use” assets for its own account on certain conditions, such as that the re-use benefits the UCITS and is in the interests of unit-holders is covered by high quality, liquid collateral under a title transfer collateral arrangement, equal at least to the market value of the reused assets plus a premium. This prohibits PB-style re-hypothecation (which is of course allowed under AIFMD structures but allows UCITS to engage in securities lending.

  1. ↑ If it has delegated the custody function, like.
  2. ↑ ESMA opinion on the subject. See also UCITS V Art. 22(7). Good note on it also from Matheson here.
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