Articles 348-350 set out the own funds requirements for positions that meet the definition of a CIU. Article 348 states that CIUs are subject to an own funds requirement for position risk, comprising specific and general risk, of 32%. Therefore those CIUs which cannot be looked through in accordance with Article 350 will be subject to this own funds requirement for position risk of 32%. Article 349 sets a number of conditions which, if met, would allow a CIU to be looked through to its underlying exposures in accordance with Article 350. One such condition is Article 349(f) which states that the CIU “shall be managed by persons supervised in accordance with Directive 2009/65/EC or equivalent legislation. This essentially indicates that the CIU must be a UCITS fund (2009/65/EC) or be subject to equivalent legislation. Article 349 does not specify what such equivalent legislation would be. However, Article 132 does contain a similar proviso that CIUs may be looked through to their underlying exposures “if the CIU is managed by a company which is subject to supervision that is considered equivalent to that laid down in Union law” (Article 132(3)(a)) and Article 132 then goes on to state that: “the Commission may adopt, by way of implementing acts, and subject to the examination procedure referred to in Article 464(2), a decision as to whether a third country applies supervisory and regulatory arrangements at least equivalent to those applied in the Union. In the absence of such a decision, until 1 January 2015, institutions may continue to apply the treatment set out in this paragraph to exposures in the form of units or shares of CIUs from third countries where the relevant competent authorities had approved the third country as eligible for that treatment before 1 January 2014”. The Commission was tasked with making a number of similar equivalency decisions prior to January 1 2015. Accordingly, the Commission published equivalency decisions relating to the CRR for Articles 107, 114, 115, 116 and 142 on December 12 2014 under reference 2014/908/EU. These decisions related to credit institutions, investment firms and exchanges which are located in third countries but no mention was made of Article 132. In the absence of this decision, all of those CIUs which are not UCITS are automatically subject to the 32% capital treatment. This includes all ETFs which are regulated in the U.S. and Switzerland. This is a punitive capital treatment for positions which are well diversified and typically exhibit very low price volatility.