20.3.2007 Official Journal of the European Union L 7911 DIRECTIVES COMMISSION DIRECTIVE 2007/16/EC of 19 March 2007 implementing Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards the clarification of certain definitions (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (}), and in particular point (a) of Article 53a thereof, Whereas: (1)  Directive 85/611/EEC contains several definitions, sometimes interlinked, related to the assets which are eligible for investment by undertakings for collective investment in transferable securities, hereinafter ‘UCITS, such as a definition of transferable securities and a defi- nition of money market instruments. (2)  Since the adoption of Directive 85/611/EEC, the variety of financial instruments traded on financial markets has increased considerably, leading to uncertainty in deter- mining whether certain  categories of financial instruments are encompassed by those definitions. Uncertainty in applying the definitions gives rise to divergent interpretations of the Directive. (3)  In order to ensure a uniform application of Directive 85/611/EEC, to help Member States to develop a common understanding as to whether a given asset category is eligible for a UCITS and to ensure that the definitions are understood in a manner consistent with (") OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive 2005/1/EC of the European Parliament and of the Council (O] L 79, 2432005, p. 9). the principles underlying Directive 85/611/EEC, such as those governing risk-diversification and limits to exposure, the ability of the UCITS to redeem its units at the request of the unit-holders and to calculate its net asset value whenever units are issued or redeemed, it is necessary to provide competent authorities and market participants with more certainty in this respect. Greater certainty will also facilitate a better functioning of the notification procedure for the cross-border distribution of UCITS. The clarifications provided by this Directive do not of themselves give rise to any new behavioural or oper- ational obligations for competent authorities or market participants. Rather than establishing exhaustive lists of financial instruments and transactions, they elucidate basic criteria as an aid in assessing whether or not a class of financial instrument is covered by the various definitions. The eligibility of an asset for a UCITS must be assessed not only with regard to whether it falls within the scope of the definitions as clarified by this text but also with regard to the other requirements of Directive 85/611/EEC. National competent authorities could work together through the Committee of European Securities Regulators (CESR) to develop common approaches on the practical, day-to-day application of those clarifications in the context of their supervisory duties, notably in connection with other requirements of Directive 85/611/EEC such as control or risk management procedures, and to ensure the smooth functioning of the product passport. Directive 85/611/EEC defines transferable securities exclusively from a formalflegal point of view. Accordingly the definition of transferable securities is applicable to a wide range of financial products with differing features and different levels of liquidity. For each of those financial products, consistency between the definition of transferable securities and other provisions of the Directive should be ensured.