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IR- Revised guidance on the use of financial indices by UCITS

21/01/2020

On 23 July 2019, The Central Bank updated their guidance on the use of financial indices by UCITS.

The main purpose of the update was to amend the certification process that was introduced initially in October 2018 to confirm an index certification with the Central Bank is not required in all circumstances. The Guidance now contains criteria for when an index certification is not required, including if, on a “look-through” basis, it would be possible for the UCITS to directly invest in the constituents of the index as allowed by the UCITS Regulations (for example the “5/10/40” rule as applied to equity and debt securities) and where a UCITS uses an index solely as a performance benchmark. It is noteworthy to point out that it the responsibility of the UCITS to make the assessment and determination as to whether or not the index meets the relevant criteria prior to using the proposed index. Appropriate records should be kept on such assessments as the Central Bank may carry out spot checks on a UCITS’ compliance with the requirements.

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