On 19 April 2021, ISDA, the Alternative Investment Management Association, Investment Company Institute, the Institutional Money Market Funds Association and SIFMA’s Asset Management Group sent a letter to the Bank of England, FCA and HM Treasury to ask them to permit EEA UCITS to be used as collateral in their non-cleared derivatives business. Under the current rules, UK UCITS would be the only UCITS eligible under UK rules after March 2022.
The associations believe that once the restriction to use UK UCITS as initial margin is in effect, there will be negative consequences for the counterparties concerned and for the attractiveness of the UK as a jurisdiction in which to do uncleared derivatives business. This limitation is also not justified on risk grounds.