Politics & Regulation Regulation

Derivative rules need to be revised, taskforce says


Some of the provisions in the UCITS Directive have fallen out of place with innovation by product providers, according to a report published by a European asset management industry taskforce.

When the directive was first developed the use of derivatives was limited to hedging risks and efficient portfolio management.

Today UCITS funds are allowed to use derivatives as an integral part of their investment strategy not only to limit market risks but also to generate returns.

The 187-page report, Rethinking Asset Management, states: “Some of the rules regarding the use of derivatives have been questioned by observers who consider they