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FESE welcomes the call for evidence and considers that a more flexible approach in the UCITS Eligible Assets Directive could promote market liquidity and the attractiveness of EU markets. For example, the “5/10/40 Rule” for investments in transferable securities and money market instruments can be detrimental to issuers and investors and we suggest a review and potential adjustment of this rule to a more flexible “20/40 Rule”.
We also believe that there are inconsistencies between banking, clearing, and EU funds regulation, which disincentivise buy-side entities from using central clearing for securities financing transactions. Therefore, we recommend targeted amendments to the UCITS and MMF frameworks to facilitate more voluntary clearing and efficiencies for the buy-side.