Chapter VII, Article 51 · Directive 2009/65/EC

Contents

Article 51 #

1.A management or investment company shall employ a risk-management process which enables it to monitor and measure at any time the risk of the positions and their contribution to the overall risk profile of the portfolio of a UCITS. In particular, it shall not solely or mechanistically rely on credit ratings issued by credit rating agencies as defined in Article 3(1)(b) of Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies^note, for assessing the creditworthiness of the UCITS’ assets.It shall employ a process for accurate and independent assessment of the value of OTC derivatives.It shall communicate to the competent authorities of its home Member State regularly in regard to the types of derivative instruments, the underlying risks, the quantitative limits and the methods which are chosen in order to estimate the risks associated with transactions in derivative instruments regarding each managed UCITS.Competent authorities shall ensure that all information received under the third paragraph aggregated in respect of all the management or investment companies they supervise is accessible to ESMA in accordance with Article 35 of the Regulation (EU) No 1095/2010, and the European Systemic Risk Board (the ‘ESRB’) established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board^note in accordance with Article 15 of that Regulation for the purpose of monitoring systemic risks at Union level.

2.Member States may authorise UCITS to employ techniques and instruments relating to transferable securities and money market instruments under the conditions and within the limits which they lay down provided that such techniques and instruments are used for the purpose of efficient portfolio management.When those operations concern the use of derivative instruments, the conditions and limits shall conform to the provisions laid down in this Directive.Under no circumstances shall those operations cause the UCITS to diverge from its investment objectives as laid down in the UCITS’ fund rules, instruments of incorporation or prospectus.

3.A UCITS shall ensure that its global exposure relating to derivative instruments does not exceed the total net value of its portfolio.The exposure is calculated taking into account the current value of the underlying assets, the counterparty risk, future market movements and the time available to liquidate the positions. This shall also apply to the third and fourth subparagraphs.A UCITS may invest, as a part of its investment policy and within the limit laid down in Article 52(5), in financial derivative instruments provided that the exposure to the underlying assets does not exceed in aggregate the investment limits laid down in Article 52. Member States may provide that, when a UCITS invests in index-based financial derivative instruments, those investments are not required to be combined for the purposes of the limits laid down in Article 52.When transferable securities or money market instruments embed a derivative, the derivative shall be taken into account when complying with the requirements of this Article.

3a.Taking into account the nature, scale and complexity of the UCITS’ activities, the competent authorities shall’ monitor the adequacy of the credit assessment processes of the management or investment companies, assess the use of references to credit ratings, as referred to in the first subparagraph of paragraph 1, in the UCITS’ investment policies and, where appropriate, encourage mitigation of the impact of such references, with a view to reducing sole and mechanistic reliance on such credit ratings.

4.Without prejudice to Article 116, the Commission shall adopt, by means of delegated acts in accordance with Article 112a, measures specifying the following:

(a)criteria for assessing the adequacy of the risk-management process employed by the management or investment company in accordance with the first subparagraph of paragraph 1;

(b)detailed rules regarding the accurate and independent assessment of the value of OTC derivatives; and

(c)detailed rules regarding the content of and procedure to be followed for communicating the information referred to in the third subparagraph of paragraph 1 to the competent authorities of the management company's home Member State.

The criteria referred to in point (a) of the first subparagraph shall ensure that the management or investment company is prevented from relying solely or mechanistically on credit ratings, as referred to in the first subparagraph of paragraph 1, for assessing the creditworthiness of the UCITS’ assets.

5.In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine the conditions of application of the delegated acts adopted by the Commission regarding the criteria and rules referred to in paragraph 4.Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.

Defined terms · 19

Show every defined term

branch
means a place of business which is a part of the management company, which has no legal personality and which provides the services for which the management company has been authorised;
CCP
means a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012 of the European Parliament and of the Council;
central securities depository
means a central securities depository as defined in Article 2(1), point (1), of Regulation (EU) No 909/2014 of the European Parliament and of the Council.
close links
means a situation in which two or more natural or legal persons are linked by either:
competent authorities
means the authorities which each Member State designates under Article 97;
cross-border merger
means a merger of UCITS:
depositary
means an institution entrusted with the duties set out in Articles 22 and 32 and subject to the other provisions laid down in Chapter IV and Section 3 of Chapter V;
directors
shall mean those persons who, under the law or the instruments of incorporation, represent the investment company, or who effectively determine the policy of the company;
domestic merger
means a merger between UCITS established in the same Member State where at least one of the involved UCITS has been notified pursuant to Article 93;
durable medium
means an instrument which enables an investor to store information addressed personally to that investor in a way that is accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;
financial instrument
means a financial instrument specified in Section C of Annex I to Directive 2014/65/EU of the European Parliament and of the Council;
initial capital
means the funds as referred to in Article 57(a) and (b) of Directive 2006/48/EC;
management body
means the body with ultimate decision-making authority in a management company, investment company or depositary, comprising the supervisory and the managerial functions, or only the managerial function if the two functions are separated.
management company
means a company, the regular business of which is the management of UCITS in the form of common funds or of investment companies (collective portfolio management of UCITS);
mergers
means an operation whereby:
money market instruments
means instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time;
own funds
means own funds as referred to in Title V, Chapter 2, Section 1 of Directive 2006/48/EC;
qualifying holding
means a direct or indirect holding in a management company which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists;
transferable securities
means:

Defined terms · 19

Show every defined term

branch
means a place of business which is a part of the management company, which has no legal personality and which provides the services for which the management company has been authorised;
CCP
means a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012 of the European Parliament and of the Council;
central securities depository
means a central securities depository as defined in Article 2(1), point (1), of Regulation (EU) No 909/2014 of the European Parliament and of the Council.
close links
means a situation in which two or more natural or legal persons are linked by either:
competent authorities
means the authorities which each Member State designates under Article 97;
cross-border merger
means a merger of UCITS:
depositary
means an institution entrusted with the duties set out in Articles 22 and 32 and subject to the other provisions laid down in Chapter IV and Section 3 of Chapter V;
directors
shall mean those persons who, under the law or the instruments of incorporation, represent the investment company, or who effectively determine the policy of the company;
domestic merger
means a merger between UCITS established in the same Member State where at least one of the involved UCITS has been notified pursuant to Article 93;
durable medium
means an instrument which enables an investor to store information addressed personally to that investor in a way that is accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;
financial instrument
means a financial instrument specified in Section C of Annex I to Directive 2014/65/EU of the European Parliament and of the Council;
initial capital
means the funds as referred to in Article 57(a) and (b) of Directive 2006/48/EC;
management body
means the body with ultimate decision-making authority in a management company, investment company or depositary, comprising the supervisory and the managerial functions, or only the managerial function if the two functions are separated.
management company
means a company, the regular business of which is the management of UCITS in the form of common funds or of investment companies (collective portfolio management of UCITS);
mergers
means an operation whereby:
money market instruments
means instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time;
own funds
means own funds as referred to in Title V, Chapter 2, Section 1 of Directive 2006/48/EC;
qualifying holding
means a direct or indirect holding in a management company which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists;
transferable securities
means:

Directive 2009/65/EC

Article 51 #

Defined terms · 19

Key facts

History · 1 version

Article 51 #

Connections

Article 51#

Defined terms · 19

Key facts

History · 1 version

Article 51#

Connections

Article 51 #

Article 51 #