EBF suggests that the term "exchange-traded" makes it clear that units can only be bought and sold on an exchange. Therefore, secondary market investors should not have a right to direct redemption of ETF units by the issuer.
The EBF welcomes ESMA’s approach of awaiting the outcome of MiFID in relation to the issue of complexity. As there might be other ETFs which are not compliant with UCITS, the “UCITS-brand“ should appear in the name in order to avoid confusion.
Regarding EPM the EBF suggests the application of reconciliation with the counterparty of trades that are collateralised. Furthermore, it points out that it is usual for this third party to seek re-imbursement through a fee sharing arrangement rather than charging a flat fee.
The EBF does not believe that incorporating collateral with other assets to calculate compliance with UCIT diversification rules is practically achievable or necessary. The EBF is of the view that a high correlation requirement should not be applied for EPM techniques.
Limiting the proportion of the portfolio that can be lent, by counterparty or at portfolio level, would limit the opportunities for UCITS in securities lending and lead to reduced competitiveness. It remains unclear to the EBF who may qualify as an independent valuation agent. Involving a third party would cause high costs while the added value compared with an affiliated valuation agent is questionable.
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