ESMA’s Final Report on the UCITS EAD – a Simmons client note

As we reported at the time, on 26 June 2025, ESMA published a Final Report, in which it set out technical advice to the European Commission (the Commission) on its review of the UCITS Eligible Assets Directive (EAD).

The EAD helps define the assets in which a UCITS can invest but dates back to March 2007. This review represents the first major opportunity to consider how far it remains fit for purpose in light of significant changes in the financial markets since its inception.

ESMA’s Final Report then, is a significant step in how the UCITS brand develops in the future and will be of interest to all those who manage such funds.

The Simmons & Simmons Client Note
Our Client Note provides

• a detailed summary of the key topics which ESMA addressed and
• our assessment of the advice that ESMA has given the Commission.

Although, overall, we consider ESMA’s recommendations to be sensible (though not exactly far-reaching), we expect there will be strong opposition to a number of them both from National Competent Authorities (who will not want the updated eligibility regime to be more restrictive than now) and from the funds industry.

Note that the Commission is not bound to follow ESMA’s recommendations and, with the Council of the EU and the European Parliament due to review any proposal for new legislation that the Commission adopts, much can change between now and the final legislation being agreed.