The asset management industry has responded to an industry
consultation which sets out potential new requirements for
repurchase and reverse repurchase arrangements for UCITS.
European Securities and Markets Authority proposes a
distinct regime for repurchases, usually referred to as repos,
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.
Repos provide a form of borrowing and are principally used
to generate cash for funding purposes or to raise cash for
Reverse repos are a cash management tool and have largely
replaced the unsecured deposit market.
The aim of the consultation (see earlier story) is to ensure
that the guidelines that ESMA wishes to develop "are an
appropriate regime for the treatment of repo and reverse repo
with regard to the recallability of assets subject to these
The European regulator had...