18 June 2013

AMF position 2013-06: ETFs and other UCITS issues

AMF applies all the Guidelines issued by ESMA on ETFs and other UCITS issues. These guidelines have been enacted on the basis of Directive UCITS IV, transposed into domestic law in the Monetary and Financial Code and in the AMF General Regulation.

They set out ESMA’s vision on how EU law should apply when it comes to managing UCITS by specifying on the one hand the information on index funds and ETFs that must be published and, on the other hand, the specific rules that must be complied with by UCITS when they use over-the-counter financial derivative instruments and efficient portfolio management techniques. These Guidelines also set out criteria that must be complied with by index funds in which UCITS invest.

Scope

These Guidelines apply to UCITS compliant with Directive 2009/65/EC (UCITS).

They revolved around six issues:

• Index-tracking leveraged or unleveraged UCITS,
• ETFs and the treatment of secondary market investors,
• The use of efficient portfolio management techniques,
• The use of financial derivative instruments,
• Counterparty risk and the management of collateral,
• Eligible financial indices.

ETFs are governed by Article D. 214-22-1 of the Monetary and Financial Code.

Incorporation into the regulatory practices of the AMF

The AMF informs financial market participants covered by these rules that, from now on, their personal obligations arising from the legal and regulatory provisions stemming from the transposition of the aforementioned Directive must be understood in light of the provisions set out in this position, which itself reiterates the ESMA Guidelines 2012/832.

This position shall apply from the date of its publication. However, the provisions of Article 28 shall only apply from the date of entry into force of the decree amending Article R. 214-15-1 of the Monetary and Financial Code. In the meantime, the AMF recommends at this juncture that asset management companies comply with the provisions of Article 28, it being stipulated that its scope could be specified by ESMA.

Full position

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