{"id":"circulars/faq-cssf-faq-use-of-securities-financing-transactions-by-ucits","title":"CSSF FAQ – Use of Securities Financing Transactions by UCITS","type":"circular","date":"2020-12-18","kind":"faq","html":"<p>CSSF FAQ – Use of Securities Financing Transactions by UCITS is a CSSF FAQ, published 18 December 2020.</p>\n<p>Relevant for: AIFMs, Investment fund managers, Management companies - Chapter 15, Management companies - Chapter 16, Part II UCIs, SIFs, UCITS.</p>\n<p>Main topic: SFTR. Keywords: Internal governance, Investor protection, Risk management, Supervisory disclosure, UCI prospectus.</p>\n<h2>Text</h2>\n<p>FAQ – Use of Securities Financing Transactions by UCITS Version 2 – 12 February 2026</p>\n<p>date</p>\n<p>Modification/addition/deletion …</p>\n<p>12.02.2026</p>\n<p>Adaptation to the new graphic guidelines</p>\n<p>18.12.2020</p>\n<p>First publication</p>\n<p>FAQ – USE OF SECURITIES FINANCING TRANSACTIONS BY UCITS Version 2 – 12 February 2026</p>\n<p>TABLE OF CONTENTS Context ......................................................................................................................... 5 SFTs and applicable regulatory framework ................................................................... 5 Chapter 1 – Disclosure to investors ............................................................................... 7 Q1.1. Point 25 of Section X of the Guidelines requires UCITS to inform investors in the prospectus clearly of its intention to use SFTs. Article 14(1) of SFTR requires the UCITS prospectus to include a clear statement with regard to the SFTs used. Article 14(2) and Section B of the Annex of the SFTR requires amongst others for a general description of these SFTs used, for the rationale of their use and for overall data (expected and maximum proportions) to be reported for each type of SFT. What are the expectations in relation to the disclosure of this information in the UCITS prospectus? ................................................................... 7 Q1.2. How should UCITS disclose the risks involved by the use of the SFTs in the prospectus, in line with the requirements of point 25 of Section X of the Guidelines and the information required under Article 14(2) and Section B of the Annex of SFTR? ..................................................................................................... 8 Q1.3. What should UCITS specifically disclose in the prospectus on gross revenues and costs/fees arising from the use of SFTs as per point 28 of Section X of the Guidelines and Article 14(2) with Section B of the Annex of the SFTR on the policy on sharing of return generated by SFTs? .................................................... 8 Q1.4. What should UCITS specifically disclose in the prospectus on potential conflicts of interest arising from the use of SFTs as per point 25 of Section X of the Guidelines? ..................................................................................................... 9 Chapter 2 – SFT costs / fees .......................................................................................... 9 Q2.1. What should UCITS comply with in terms of the requirements on direct and indirect operational costs/fees arising from SFTs as per points 28 and 29 of Section X of the Guidelines and related provisions on the policy on sharing of returns on SFTs under Article 14 of SFTR and Section B of the Annex? ................. 9 Chapter 3 – Conflicts of interest and best execution .................................................... 10 Q3.1. Chapter III of CSSF Regulation No 10-04 sets forth provisions that IFMs need to comply with in terms of conflicts of interest. How do the provisions apply in the context of the use of the SFTs? ................................................................. 10 Q3.2. Chapter III of CSSF Regulation No 10-4 sets forth provisions that IFMs need to comply with in terms of best execution. In particular, Articles 28 to 30 of CSSF Regulation No10-4 further specify these provisions in relation to best execution by requiring notably from IFMs to take all reasonable steps to obtain the best possible result for the UCITS, taking into account price, costs, speed, likelihood of execution and settlement, order size and nature, or any other</p>\n<p>FAQ – USE OF SECURITIES FINANCING TRANSACTIONS BY UCITS Version 2 – 12 February 2026</p>\n<p>consideration relevant to the execution of the order. How do those provisions apply in the context of the use of the SFTs? ........................................................</p>\n<p>The text above is the opening of the document; the PDF carries the whole.</p>\n<p><a href=\"https://www.cssf.lu/en/Document/cssf-faq-use-of-securities-financing-transactions-by-ucits/\" target=\"_blank\" rel=\"noreferrer\">Document page</a>, <a href=\"https://www.cssf.lu/wp-content/uploads/FAQ_EPM.pdf\" target=\"_blank\" rel=\"noreferrer\">PDF</a>. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.</p>"}